Alibaba (NYSE:BABA) has introduced a next-generation artificial intelligence processor, the XuanTie C950, built using 5-nanometer technology and based on the open-source RISC-V chip architecture.
The company said the new chip delivers more than three times the performance of its predecessor and is designed to natively support large AI models, including Qwen3 and DeepSeek V3.
Morgan Stanley noted that developing chips internally helps reduce dependence on third-party suppliers while allowing companies to design processors tailored to specific applications. The bank added that proprietary chips also allow faster expansion of computing capacity during periods of strong demand and can improve efficiency by lowering the cost per token.
The investment bank also said in-house chip development helps limit geopolitical risks associated with U.S. export controls and reduces regulatory exposure by aligning with government-backed technology initiatives.