Alibaba stock jumps as Jack Ma visits Europe
Chinese tech giant unveils new chip to power servers
Alibaba stock jumped on Wednesday after the Chinese tech giant unveiled a new chip designed for servers.
The processor, called Yitian 710, will go into new servers called Panjiu. Although neither the chip nor the servers will be sold directly to customers, services based on the new technology will be sold to the company’s cloud computing clients.
For three years, Alibaba has openly identified cloud computing as an essential driver to its future growth.
Although it currently lags behind the likes of Google, Amazon and Microsoft, the company is already the biggest cloud computing firm in China. Indeed, the sector accounts for 8% of the company’s total revenue.
In a statement, President of Alibaba Cloud Intelligence Jeff Zhang said: “Customizing our own server chips is consistent with our ongoing efforts toward boosting our computing capabilities with better performance and improved energy efficiency.”
Made in China
The push comes during a time of prolonged shortages in the global semiconductor chip industry. While Alibaba will not manufacture the chip itself, it has based its design on architecture from British semiconductor company Arm.
Although the likes of Baidu and Huawei have also stepped up their domestic production, Beijing’s goal of meeting 70% of its semiconductor needs through domestic supply remains far off.
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According to market research firm IC Insights, China domestically sourced only 16% of its semiconductors last year. Chinese authorities put the figure closer to 30%.
Investor sentiment was further boosted on Wednesday by reports that Alibaba founder Jack Ma was visiting Europe.
The Alibaba-owned South China Morning Post reported that Ma had travelled to Spain for a technology and agriculture study tour.
Ma briefly disappeared from the public eye towards the end of 2020 after criticising excessive regulation of China’s banking sector. Only weeks earlier he had stepped down from the Alibaba board having previously relinquished his position of chairman in September 2019.
Shortly afterwards, Chinese authorities began an antitrust investigation into Alibaba and cancelled the planned public offering of its financial subsidiary, Ant Group. The listing would have been the largest on record, globally.
With Ma’s reappearance indicating a degree of rehabilitation alongside the latest chip launch, Alibaba closed Wednesday up 6.6% at $HK175.80 ($22.61), up 28% since the start of the month.