Alibaba is making moves to take its chipmaking division, T-Head, public. According to a Bloomberg report on Thursday, the Chinese tech giant is in the early stages of preparing for an initial public offering (IPO). The news gave the company’s stock a healthy boost, with U.S.-listed shares jumping 4.6% before the market opened.
Before the IPO, Alibaba had a specific plan to change how the unit operates. The company first wants to reorganize T-Head so that employees own a piece of the business. Once that transition is complete, they will look at listing the company on the stock market. Because the plan is still in its infancy, we don’t yet know the exact timing or the unit’s potential value.
Alibaba started T-Head in 2018 to handle its semiconductor needs in-house. The division designs a wide variety of chips, including processors for data centers and artificial intelligence, as well as components for Internet of Things (IoT) devices. Essentially, they manage the entire design process for the hardware that powers Alibaba’s digital empire.
This move comes at a very competitive time in China’s tech sector. Alibaba has been pouring resources into artificial intelligence to stay ahead of its rivals. Just this past November, the company upgraded its AI chatbot and released a free app powered by its most advanced model, known as Qwen.
By spinning off T-Head, Alibaba could give the unit more freedom to grow while potentially raising a massive amount of cash from investors. While the details are still coming together, the market clearly sees this as a positive step for the e-commerce leader.
