Ali's greatest strength today lies in the fact that its leadership is still composed of a generation of entrepreneurs who have been actively competing in the market for years. This has made them highly sensitive to market trends, and as a result, Alibaba's strategic moves often serve as a barometer for market shifts. For example, entering the retail sector, pioneering food delivery services, investing in entertainment stores, and even exploring shared bicycle models—each of these ventures has tapped into massive consumer flows and attracted significant capital returns.
Recently, Alibaba has started to make strategic investments in the chip industry. On November 15, 2017, the Alibaba Venture Fund led an investment in a leading AI startup called ToughX. Earlier, on August 18, Alibaba Ventures focused on Cambrian Technology, which specializes in AI chips. Then, on October 24, Ant Financial led an investment in Shenjian Technology. Within just three months, Alibaba invested in three AI chip companies. Why this sudden interest? Because the Alibaba platform generates vast amounts of user data daily, and AI, especially deep learning, is at the core of this data processing. As the need for more intelligent analysis of massive datasets grows, there will be an increasing demand for AI chips that offer higher computing power, lower energy consumption, and smaller form factors.
The development of AI chips began to gain momentum a few years ago. Today, many well-known AI chip startups were established between 2014 and 2016. Most of them remained relatively unknown until 2017 when they started receiving more media attention and investor interest.
[Image: "Ali has three consecutive AI chip companies in three months" – source: http://i.bosscdn.com/blog/05/2F/KH/1_0.jpg]
Among Alibaba’s recent investments, Cambrian focuses on mobile applications, Shenjian targets the security sector, and Kneron specializes in smart home and smart security solutions—areas where it ranks among the top in the AI chip startup space. Clearly, Alibaba's selection process is sharp and insightful.
Since Alibaba has entered the AI chip arena, does this signal that AI chips will become the next big investment trend? Absolutely. The level of enthusiasm shown by analysts and investors in chip-related reports is evident. Currently, most chips are still imported, and the biggest challenge in the industry is the low domestic replacement rate. Relying on imports is not a sustainable long-term solution. At present, the domestic chip replacement rate is only about 10%. According to the State Council's goal set in 2015, the target is to reach 40% by 2025. This means the path to achieving full domestic chip independence is still long, but it also represents a huge opportunity for AI chip startups.
Moreover, the government is strongly supporting the growth of the chip industry. A major fund was established in 2014, and by mid-2017, the first phase had reached 138.7 billion yuan. Local industry funds had accumulated 514.5 billion yuan. The second phase is expected to approach trillions of yuan.
The concept is promising, the market potential is huge, and the government is backing it. AI chips should indeed be one of the best investment directions for investors. They power robots, drones, and self-driving cars. Companies like NVIDIA, which partners with Toyota and Volvo, have seen their stock prices rise tenfold in just three years. However, for domestic chip companies, the current market is overly speculative, and technological progress hasn’t met expectations. In such a hype-driven environment, retail investors should remain cautious. Now may not be the best time to jump in. But for those looking ahead, companies like Neusoft Carrier, Quanzhi Technology, and National Technology, which are starting from a low base, could still be worth keeping an eye on.
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