Alibaba’s New Frontier: The T-Head Listing and the Global AI Race

Alibaba Group is reportedly making preparations to spin off and eventually list its semiconductor subsidiary, T-Head, according to Bloomberg News, which cited sources familiar with the situation. Following the report, Alibaba’s U.S.-listed shares climbed 4.6% in premarket trading.

The company’s initial move would involve reorganizing the chip unit into an entity partially owned by its employees, after which an initial public offering would be considered. However, the timetable for such a listing has not yet been determined. Sources indicated that the initiative remains at a preliminary stage, and no clarity has emerged regarding the potential valuation of the business.

Established in 2018, T-Head Semiconductor operates as Alibaba’s in-house chip development arm, focusing on a broad portfolio that includes processors for data centers, artificial intelligence applications, and Internet-of-Things devices, covering the entire chip design process. Separately, in November, Alibaba introduced a significant enhancement to its artificial intelligence chatbot, unveiling a free consumer application powered by its most advanced Qwen large language model, as part of efforts to strengthen its competitive position against domestic peers in China’s rapidly evolving AI sector.

Alibaba Group Holding Limited shares also gained momentum after Arete Research raised its rating on the stock to “buy” from “neutral” and set a price target of $190. During midday trading on Wednesday, the shares advanced 3.9%, reaching an intraday high of $169.87 and last trading at $168.67. Trading volume totaled approximately 11.6 million shares, which was about 29% below the average daily volume of roughly 16.4 million shares, following a previous close of $162.39.