Alibaba has been deploying its custom chips for smaller AI models since early 2025
In sum – what to know:
Alibaba and Baidu deploy in-house chips – Both Chinese companies are training AI models with custom silicon, partly reducing dependence on Nvidia.
U.S. export curbs accelerate shift – Washington’s restrictions push Chinese firms to adopt domestic AI chip designs, with Beijing applying policy pressure.
Chinese chips reach parity – Alibaba’s processors are reportedly strong enough to match Nvidia’s H20, narrowing the performance gap.
China’s tech giants Alibaba and Baidu have begun training AI models with their own in-house chips, partly replacing U.S. chip company Nvidia processors, according to a report from The Information that cited four people familiar with the matter.
Alibaba has been deploying its custom chips for smaller AI models since early 2025, while Baidu is currently testing new versions of its Ernie AI system using its Kunlun P800 chip, the report said.
The shift marks a notable change in China’s AI ecosystem, which has long depended on Nvidia’s advanced GPUs.
U.S. restrictions on high-end chip exports to China have accelerated the drive for domestic alternatives, with the Chinese government urging domestic firms to adopt locally-developed technology.
Still, both Alibaba and Baidu continue to use Nvidia GPUs for their most advanced AI models. Nvidia’s H20 — the strongest chip it can sell in China — lags behind the H100 and Blackwell series but remains faster than Chinese chips, according to the report.
Alibaba’s chip, however, is reportedly on par with Nvidia’s H20, The Information said, citing three employees who have worked with it.
Earlier this year, the U.S. Government blocked sales of Nvidia’s H20 chip, the most advanced processor available to Chinese customers, despite it being specifically designed to comply with export controls.
In August, the Trump administration struck a deal allowing Nvidia to sell H20s in China, provided that 15% of those revenues go to the U.S. government.
Recent reports stated that Nvidia was reportedly preparing a new AI chip for the Chinese market that will outperform its H20 model. Tentatively named B30A, the chip will feature a single-die design, meaning all major components will be integrated onto one piece of silicon. It is expected to provide about half the computing power of Nvidia’s dual-die Blackwell Ultra GPUs, according to previous reports.
Nvidia CEO Jensen Huang previously said there is a “real possibility” that the company’s advanced Blackwell processors could be sold in the Chinese market.
Chinese authorities have discouraged domestic companies from deploying the H20 chip, particularly in government and security-related projects. Chinese authorities also reportedly instructed large firms such as Alibaba, ByteDance and Tencent to pause H20 purchases while a national security review is underway.
China is requiring its data centers to adopt more domestically produced chips, underscoring Beijing’s intention to reduce dependence on foreign semiconductors, according to a previous report by the South China Morning Post.
