Photo/Shetuwang

Apr. 23 (NBD) -- The chip industry has garnered unprecedented attention following the U.S. ban on exports to China's tech firm ZTE Corp.

Last Friday, internet titan Alibaba Group ("Alibaba") announced a buyout of Hangzhou C-SKY Microsystems Co., Ltd. ("C-SKY") , a leading supplier of embedded CPU IP cores in mainland China, for an undisclosed amount. 

Regarding the deal, Zhang Jianfeng, Chief Technology Officer for Alibaba, said the full takeover is an important part of the company's push into the chip sector. IP core is key to empower basic functionalities of chips, and entering the IP core segment is the foundation to guarantee China's self-sufficiency in the chip sector.

In fact, Alibaba has become the largest shareholder of C-SKY as early as January 2016, and the two conducted in-depth cooperation in the IoT area. 

At last month's The Computing Conference in Shenzhen, Hu Xiaoming, Senior Vice President of Alibaba and President of Alibaba Cloud Computing, noted that the Internet of Things (IoT) is a new track for Alibaba following e-commerce, finance, logistics, and cloud computing, and chips are at the center of all IoT applications. However, the foundation of the Chinese chip industry is weak at present, and core chips are largely imported. 

The tech behemoth's acquisition of C-SKY is to prevent itself from being controlled by foreign partners in the IoT development, Wang Yanhui, secretary-general of the Mobile Phone China Association, told NBD. 

Apart from the new acquisition, Alibaba has invested in a number of chip makers, including Cambricon, Barefoot Networks, DeePhi Tech, Kneron, and ASR. 

Moreover, it is working on artificial intelligence (AI) chips independently. 

Last week, the tech titan revealed its R&D arm Alibaba DAMO Academy is currently developing a neural network chip called Ali-NPU, which will be used for image and video analysis and machine learning. 

In addition to Alibaba, other Chinese tech companies like Baidu, Tencent, iFlytek, Huawei, and Xiaomi have entered the chip sector, either through investment or independent development. Real estate magnate Evergrande Group also ventured into the integrated circuit industry. 

The entry of tech and real estate giants is expected to do good to the Chinese chip industry and boost the forward-looking research, Wang Yanhui told NBD.

According to a report by IHS Markit, the worldwide semiconductor revenue totaled 429 billion U.S. dollars last year and the top 10 suppliers contributed 58.5% of the total revenue. But unfortunately, none of them is from China.

The chip industry relies heavily on the ecosystem, Niu Xinyu, founder of Corerain Technologies, a supplier of AI chip-based tailor-made solutions, explained to NBD. For example, the Wintel Alliance dominated the entire ecosystem in the mobile computing era based on a combination of Intel chips and Microsoft operating system. In such a case, chip technologies incompatible with the ecosystem will be hard to grow, Niu said. 

Niu stated that to gain substantial growth, China's chip industry should, on one hand, put AI applications powered by new chips into commercial use and increase their popularity among users, and on the other hand, create a sophisticated application development platform, enabling experts and application developers to quickly develop AI applications and strengthen the ecosystem.  

Email: lansuying@nbd.com.cn