The Chinese firm said the new subsidiary would make customised AI chips and embedded processors to support the firm’s push into fast growing cloud and internet of things (IoT) businesses.

Alibaba’s aggressive drive to develop its own semiconductors is seen as part of China’s moves to raise the quality of home-made chips to help propel high-tech domestic industries from cutting-edge transport to AI healthcare systems.

Alibaba bought a Chinese microchip maker Hangzhou C-SKY Microsystems to help bolster its cloud-based “internet of things” (IoT) business.

Jack Ma, Alibaba co-founder and chairman, said then that China needed to control its “core technology” like chips to avoid over-reliance on US imports.