Alibaba Group Holding Limited’s (NYSE:BABA) stock jumped Thursday after reports it is moving toward an IPO of its in-house chip unit, T-Head, underscoring how China’s tech giants are racing to unlock the value of domestic AI hardware as export controls tighten and demand for Nvidia Corp. (NASDAQ:NVDA) alternatives accelerates.



Alibaba plans to start by restructuring T-Head into a business partly owned by employees, then weigh a public listing, though the timing and potential valuation remain unclear, Bloomberg reported on Thursday.



T-Head, founded by Alibaba in September 2018, designs chips for computing and storage and continues to add engineering talent across areas such as visual AI and chip development.



Alibaba has spent years building chip design capabilities to secure key components for its data centers and cloud business.



At the same time, Alibaba has been expanding consumer-facing AI services through its Qwen app.



After revamping Qwen in November to push deeper into consumer use cases, Alibaba linked its core shopping and travel services to the chatbot in January, aiming to turn it into a one-stop AI assistant that integrates services across the Alibaba ecosystem.



<h2>Baidu Moves Toward Kunlunxin Spin-Off</h2>



Baidu Inc. (NASDAQ:BIDU) is also advancing plans to spin off its AI chip unit, Kunlunxin, after hiring banks to prepare for a Hong Kong IPO that could raise up to $2 billion.



It currently owns about 59% of Kunlunxin and expects it to remain a subsidiary following the listing.



The IPO push reflects Baidu’s growing role in China’s effort to build domestic AI chip capabilities as U.S. export controls restrict access to advanced Nvidia processors.



Baidu has laid out a multiyear chip roadmap, with the Kunlun M100 targeted for release in 2026 and the more advanced M300 planned for 2027.



The chips already support data center and telecom workloads, and Kunlunxin has begun securing orders tied to China Mobile.



BABA Price Action: Alibaba shares were up 5.06% at $177.20 during premarket trading on Thursday, according to Benzinga Pro data.



Image via Shutterstock

Alibaba's stock rose 5.06% to $177.20 amid reports of an impending IPO for its chip unit, T-Head, as Chinese tech firms seek to capitalize on domestic AI hardware amid global supply restrictions. T-Head, established in 2018, is being restructured for employee ownership before a potential public listing. Concurrently, Baidu is also planning a spin-off of its AI chip unit, Kunlunxin, with a Hong Kong IPO expected to raise up to $2 billion, reflecting the push for domestic AI chip capabilities in light of U.S. export controls.

- Alibaba Group's stock surged following reports of its planned IPO for T-Head, its chip unit, in response to growing demand for domestic AI hardware amid tightening export controls.  
- The restructuring of T-Head into a partly employee-owned business precedes the potential public listing, although details such as timing are not yet clear.  
- Alongside Alibaba's efforts, Baidu is moving forward with plans for a Kunlunxin IPO, aiming to enhance China's domestic AI chip capabilities amidst similar export restrictions.

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