Chinese tech giant Alibaba on Wednesday introduced a new AI chip, becoming the latest Chinese vendor to push to reduce its dependence on Nvidia GPUs.
Unveiled at the Alibaba Cloud Summit, Zhenwu M890 is a training-and-inference-integrated accelerator designed by the Chinese vendor’s semiconductor unit, T-Head. The new chip is built for AI agents, according to Alibaba. The processor is optimized for the enormous memory demands of long context windows and for multiple AI models communicating with one another. The vendor unveiled the chip alongside its updated Qwen 3.7-Max model, designed to run on the M890 for up to 35 hours.
Qwen 3.7-Max can perform continuous reasoning for a long time and handle over 1,000 tool calls, according to Alibaba. It’s designed to manage complex, multi-file code editing, refactoring and prototyping. It has a large 1-million token context window.
The release of the AI chip and model shows another way Chinese AI vendors are trying to venture out on their own and be less dependent on Nvidia GPUs. Although the U.S. is currently allowing exports of advanced AI processors such as the Nvidia H200 to China, more Chinese firms are relying on chips from local vendors, including Alibaba, Baidu and Huawei.
“Within China, this is a major plan among all the hyperscalers to be a lot more independent, to be a lot more self-sufficient,” said Lian Jye Su, an analyst at Omdia, a division of Informa TechTarget. “So, it’s more of a self-sufficient, independent story.”
A Differentiation and Cost Strategy
For Chinese AI vendors and their enterprise customers, not only does locally producing chips enable independence, but that route also becomes a cost-saving strategy, Su said.
“If you were able to run these workloads on your own chipset, it reduces your need to invest elsewhere,” he said.
For Alibaba, this move is both a differentiation strategy and a step toward a full-stack approach, similar to Chinese competitors such as Baidu and U.S. tech giants such as AWS and Google. While the vendor already has chips, M890 and its predecessor chip, XuanTie C950, focus on agentic AI, showing that Alibaba is serious about customers using its chips and customizing them for that purpose.
“If they can run their workloads on their own chipset, which gives them a lot more opportunity to do customization and optimization. That will give them a lot better performance compared to other hyperscalers,” Su said.
The timing of M890 is interesting, though, because Alibaba released the new model a day after Google launched its eighth-generation TPU at its I/O 2026 developer conference.
Some Problems
Despite this, Alibaba still faces hurdles, most notably supply chain constraints, Su said.
“China’s chipset supply chain overall is weaker than the international one or the global one,” Su said.
Also presenting a challenge for Alibaba is the issue of having to fight Nvidia if it were to rely solely on Taiwan Semiconductor Manufacturing Company. Currently, the vendor and its subsidiaries, such as Alibaba Cloud, mostly turn to its own AI chips.
“Their chipset efficiency will be rather poor as compared to global competition,” Su said. “Which means in the longer run, the savings that they incur from having their own chipset may not necessarily translate well into the overall savings.”
