Quick Take: Alibaba Boosts Hardware Capabilities With Chip Purchase

Chinese internet titan Alibaba Group Holding Ltd. has acquired Hangzhou-based chipmaker C-Sky Microsystems Co. Ltd. in an effort to increase its chipmaking capabilities as it branches into high-tech hardware.

“The acquisition is an important step for Alibaba's chip development,” said Zhang Jianfeng, Alibaba chief technology officer, in an announcement that didn’t provide the value of the deal.

The news comes amid a national call for China to ramp up its self-reliance in key technologies, such as semiconductors, following a U.S. decision this week to ban domestic companies from selling components to telecom equipment-maker ZTE Corp. That decision came after ZTE failed to comply with some terms of a settlement agreement with Washington involving ZTE’s sale of U.S.-made high-tech equipment to Iran in violation of American sanctions at the time.

Founded in 2001, C-Sky Microsystems develops embedded central processing units (CPUs) and chip architectures. The firm said it is the only embedded CPU volume provider in China with its own instruction set architecture.

C-Sky Microsystems is among a group of Chinese startups aiming to break into the sector for high-tech chip design, which is now mainly dominated by big global names such as Intel Corp. and Qualcomm Inc.

Alibaba, which plans to invest heavily in research and development, now holds stakes in domestic chipmakers including Cambricon, Barefoot Networks and Kneron. In October, it launched an initiative called DAMO Academy, a research and development project that will see it invest $15 billion over the next five years and open technology labs across the globe.

On Thursday, DAMO Academy said it is developing a neural network chip, dubbed Ali-NPU, which will be used in image analysis, machine learning and other artificial intelligence reasoning capabilities.

Contact reporter Mo Yelin (yelinmo@caixin.com)