Ali's current greatest strength lies in the fact that its leadership is still made up of a generation of entrepreneurs who have been actively competing in the market for years. This has given them an acute sensitivity to market trends, which often makes the company’s moves a reliable indicator of where the market is heading. For example, when Ali entered the retail sector, led the takeout trend, expanded into entertainment stores, and even ventured into shared bicycles, these decisions were always backed by massive consumer traffic and 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 Toughness. Earlier that year, on August 18, Alibaba Ventures focused on Cambrian Technology, an AI chip company. Then, on October 24, Ant Group invested in Shen Jian Technology. In just three months, Alibaba invested in three AI chip startups. Why is this happening? Because the Alibaba platform generates a huge number of users daily, and artificial intelligence—especially deep learning—is becoming increasingly important. As data volumes grow, more powerful, energy-efficient, and compact AI chips will be needed to support advanced intelligent analysis.
The development of AI chips began gaining traction several years ago. Most well-known AI chip startups today were established between 2014 and 2016. These companies didn’t receive much media attention until 2017, when investors started taking notice. With growing interest from the capital market, the sector is now evolving rapidly.
Among the companies Alibaba has invested in, Cambrian focuses on mobile applications, Shen Jian targets the security field, and Kneron specializes in smart home and security solutions—areas where it stands out among many AI chip startups. Clearly, Alibaba is making smart choices with its investments.
Now that Alibaba is diving deeper into AI chips, does this signal that the chip industry will be a major growth area for future capital? Absolutely. This can be seen from the intense enthusiasm surrounding chips in recent research reports. Currently, most chips are still imported, and the main challenge is the low domestic replacement rate. Relying on foreign suppliers is not a sustainable solution. Today, the domestic chip replacement rate is only around 10%. However, the government aims to increase this to 40% by 2025, showing how long the road to self-reliance still is. This creates a big opportunity for AI chip startups, especially with strong government support.
The potential is huge, the market is promising, and the state is backing the industry. It seems like AI chips should be one of the top investment opportunities. Chips power everything from robots and drones to self-driving cars. Companies like NVIDIA, which partners with Toyota and Volvo, have seen their stock prices soar tenfold in just three years. However, for domestic chip companies, there are challenges. The current market is overly hyped, and technology hasn't yet met expectations. In such a speculative environment, retail investors should stay cautious. Now might not be the best time to jump in. That said, with the vast growth potential of AI chips, companies like Neusoft Carrier, Quanzhi Technology, and National Technology—many of which are starting from a low base—could still be worth watching.
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