Alibaba Group Holding Ltd. (NYSE:BABA) announced the release of a new, more powerful artificial intelligence chip on Wednesday, as competitor Nvidia Corp (NASDAQ:NVDA) faces difficulties in the Chinese market.

The Zhenwu M890, Alibaba’s latest AI chip, delivers triple the performance of its predecessor, the Zhenwu 810E. The new processor, designed to handle memory-intensive agentic AI workloads, boasts 144 GB of GPU memory and an interchip bandwidth of 800 GB per second, reported CNBC.

At a conference in Hangzhou, Alibaba stated it has already shipped 560,000 Zhenwu units to over 400 customers across 20 industries. This new chip could potentially enhance Alibaba and its chip subsidiary T-Head’s competitiveness in China's burgeoning domestic AI processor market, which includes rivals such as Huawei and Cambricon.

Alibaba also announced on Wednesday that it will soon launch its next-generation AI model, Qwen3.7-Max.

Alibaba Challenges Nvidia In China

Alibaba's chip unit, T-Head, unveiled the Zhenwu 810E in January, designed for training and inference workloads, with performance comparable to Nvidia's China-focused H20 GPU. Reports also indicated that the Chinese tech giant also plans to spin off its chip unit, T-Head, into a standalone company with partial employee ownership to capitalize on growing demand for agentic AI.

Alibaba’s AI models and applications are expected to generate 30 billion yuan ($4.42 billion) in recurring revenue by year-end, contributing significantly to the company’s cloud-computing revenue. The company’s increased investment in AI infrastructure and cloud services is a response to rising demand.

Meanwhile, even as the U.S. has approved limited sales of Nvidia’s H200 chips to Chinese tech giants, the Jensen Huang-led company’s return to the Chinese market comes at a challenging time. Alibaba, Tencent Holding Ltd. (OTC:TCEHY), and ByteDance have expanded testing and adoption of Huawei’s Ascend AI chips, amid an aggressive push for domestic AI self-sufficiency.

That being said, SemiAnalysis analyst Myron Xie told CNBC that Alibaba's latest chip still trails leading Western rivals in memory capacity and bandwidth, with key compute performance metrics yet to be disclosed.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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