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asia.nikkei.com

Alibaba unveils AI chip to boost

cloud plans and cut reliance on US -
Nikkei Asian Review
COCO LIU and CHENG TING-FANG, Nikkei staff writers
5-7 minutes

HONG KONG/TAIPEI -- Alibaba Group Holding has unveiled

its first self-developed artificial intelligence chip for data
centers, a move aimed at reducing the Chinese tech giant's
reliance on U.S. technology amid persistent tensions between
Beijing and Washington.

The announcement also marks an important milestone in

Alibaba's attempt to become a serious player in hardware.
After starting out 20 years ago in e-commerce, the company is
now following Google, Amazon and other Western internet
rivals in attempting to move up the tech value chain with its
own chip offerings.

"This is just the first step of a 10,000-mile journey," Jeff Zhang,

Alibaba chief technology officer, told audiences at the
company’s annual cloud computing conference in Hangzhou
on Wednesday.

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"Alibaba is confident that we are not only capable of doing

what a traditional hardware company could do but also
capable of accomplishing what they could not do," Zhang said.
With its hugely popular e-commerce and digital payment
services, Alibaba is well-positioned to access the large
amounts of data needed for training AI.

Zhang said the new chip, known as the Hanguang 800, has a
computing power equivalent to that of ten graphics processing
units, or GPUs, a more general-purpose type of computing
chip used to process AI workloads. This technological
breakthrough, he added is already making a difference in
Alibaba's e-commerce business.

For instance, it used to take an hour for the system powering

Alibaba's online marketplace, Taobao.com, to process a billion
product images for its website. Now that it is running on the
new AI chip rather than GPUs, the system can do the job in
five minutes, according to the company.

"The launch of Hanguang 800 is an important step in our

pursuit of next-generation technologies, boosting computing
capabilities that will drive both our current and emerging
businesses while improving energy-efficiency," Zhang said.

Alibaba did not disclose whether it would replace the GPUs it

uses with its own AI chip on a large scale. However, the
company's billionaire co-founder Jack Ma has indicated his
desire to reduce his company's reliance on U.S. chips. Most of
the processors used to compute complicated AI workloads

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and analyze videos, images and languages in data center

servers are made by U.S. chipmakers Nvidia, Advanced Micro
Devices (AMD), Intel's Altera, as well as Xilinx.

"The market of chips is controlled by America ... and suddenly

they stop selling," Ma told an gathering of students at Waseda
University in Tokyo last year. "Japan, China, any country
should have their own technology. A company should take
responsibility for its customers, for the global future," he
continued.

In April 2018, days after the U.S. banned ZTE from importing
American components, Alibaba acquired Chinese chipmaker
Hangzhou C-SKY Microsystems to expand its own chipmaking
capabilities. Washington's crackdown on Huawei Technologies
this year has accelerated the so-called "de-Americanization"
trend in China, with more and more tech companies in the
country seeking to develop their own chips and other key
components.

Alibaba said that it has no plans to sell the chips. But analysts
say equipping its cloud service with highly-efficient AI chips
could give the company a leg up in attracting more customers
in China's increasingly competitive cloud market.

"It's not too surprising that Alibaba would develop its own AI
chip as it deploys data centers on a massive scale across
China and in some emerging markets. AI computing is quite
fragmented and every tech giant has different needs," said
Sean Yang, an analyst at Shanghai-based CINNO.

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The pursuit of customized AI chips -- designed to perform

specific tasks with lightning speed and lower power
consumption -- rather than the general-purpose graphics
processors used by most companies, has become an
emerging trend among technology heavyweights worldwide.

In 2016, Google announced its first Tensor Processing Unit, or

TPU, to compete with Nvidia for training AI models. The
company is reportedly building a team in India to create more
AI chips. Facebook, meanwhile, recently announced its AI
chip ambitions, while Amazon last year unveiled its own chips
as an alternative to traditional computing processors for AI
projects.

"The new announcement on AI chips can be viewed not only

as an effort to decouple from U.S. chipmakers, but from a
business point of view, it's also a way for Alibaba to build more
customized and competitive data center cloud service to
compete with rivals like Amazon, Google, Tencent and
Microsoft,” Yang said.

Alibaba is the undisputed leader in China’s public cloud

market, but its long-time rival Tencent Holdings is catching up.
IDC data shows that in the segment known as "infrastructure
as a service" -- one of the most popular forms of cloud
services in China -- Tencent achieved a market share of
11.5% last year. That was far behind the 43% share of Alibaba
Cloud, or AliCloud for short, but it was an marked
improvement from 7.4% in 2016.

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Meanwhile, other Chinese technology giants are also doubling

down their investment in the cloud, eyeing for a slice of this
booming market. Huawei in September pledged $1.5 billion to
recruit software developers for its computing systems.

On the global level, Alibaba ranked the third in cloud

computing after Amazon and Google.

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