Alibaba Cloud Plans to Lean on Its Own Chips to Lift AI Margins

Alibaba believes it can cut the initial payback period for AI hardware to 2.5 years as margins for AI services rise. One route to that goal, the company said, is relying more heavily on its own chips instead of commercially bought ones.

Wu described self-developed chips as a long-term and important direction for the company, saying the share of in-house silicon in its data centers would keep growing and replace more purchased chips as its own production capacity expands. He noted that commercial chips already carry very high gross margins in a period of scarce computing power, so increasing the proportion of self-developed chips would strengthen both the competitiveness of Alibaba's products and its gross profit margin.

The Register framed the cloud AI business as the Chinese group's most certain path to growth as its e-commerce operations slow.

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