China's AI Race: Alibaba Challenges Huawei's Chip Dominance

Alibaba is aggressively pursuing advancements in AI models and the development of high-performance chips to compete with domestic giants like DeepSeek and Huawei. The company's chip design unit, T-Head, recently introduced its latest AI chip, the Zhenwu M890, and has outlined a future roadmap focused on substantial performance gains. This initiative underscores China's strategic push to establish self-sufficiency in critical AI technologies.

Huawei, another major player, has proposed a new chipmaking principle called 'Her's Law,' presented as an alternative to Moore's Law. This approach focuses on system-level integration rather than solely on transistor density, aiming to achieve significant performance improvements by 2031. Huawei aims to integrate this principle into its AI chips by 2030, seeking to overcome limitations imposed by U.S. sanctions and the physical limits of shrinking transistors.

The Chinese AI chip market is dynamic, with domestic companies like Alibaba, ByteDance, and Tencent emerging as competitors to Huawei's current dominance. While Nvidia's market share has been impacted by U.S. export controls, the void is being filled by a range of Chinese vendors. Alibaba secured the second-largest shipment volume from Chinese vendors in 2025, indicating a growing challenge to Huawei's leadership in this sector.