The announcement comes days after the United States banned American firms from selling chips and other components to Chinese telecoms company ZTE for seven years, a move that rekindled discussion in China about the need for self-sufficient tech supply chains.
Senior Chinese officials held meetings this week with industry bodies, regulators and the country’s powerful chip fund about speeding up already aggressive plans for the sector in the wake of the ZTE ban, two people with direct knowledge of the talks told Reuters.
“The acquisition of Hangzhou C-SKY Microsystems, a leading Chinese supplier of embedded CPU cores, underlines our commitment to driving the development of the chip industry”, she said, referring to central processing units.
The deal is Alibaba's first involving a chipmaker. The Chinese e-commerce giant had previously invested in Hangzhou C-SKY Microsystems and was now taking its stake to 100 percent, in line with an interest in the chip industry articulated late last year, said a person familiar with the matter who declined to be identified as the matter was private.
The move could prove that US pressure on the Chinese could backfire. If forced to create their own chip business, US chipmakers could find themselves without Eastern clients. This will take time, but it is more likely to produce independence for China rather than further dependence on US tech.