Alibaba Group Holding Ltd (NYSE:BABA) Buys Chinese Chipmaker To Aid IoT Biz, Help Drive Local Chip Sector

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Alibaba Group Holding Ltd (NYSE:BABA) has acquired a Chinese microchip maker in a bid to boost its cloud-based “internet of things” (IoT) business. The move underscores the company’s commitment to advance in the chip industry. This was announced the company’s spokeswoman on Friday.

The announcement by the e-commerce giant comes just a few days after the US banned American companies from supplying chips as well as other components to Chinese telecoms company ZTE Corp for the next seven years. This moves ignited discussions in china about the need to have a separate and self-sufficient tech supply chains and reduce reliance on American companies for the same.

Recently, officials from the Chinese government held talks with regulators, industry bodies as well as the country’s powerful chip fund. The meeting centered on the need to hasten the already aggressive plans for the sector following the ZTE ban. This was revealed by two people close to the meeting.

In a statement, Alibaba’s spokeswoman said the company is working to empower several industries through the cloud-based IoT solutions. Chips play a crucial role in supporting cloud-based IoT solutions.

The company recently acquired Hangzhou C-SKY Microsystems, which is one of the leading producers of embedded CPU cores in China. According to the spokeswoman, this acquisition underscores the company’s commitment to drive meaningful development in the chip industry. The e-commerce did not reveal the full details as well terms of the acquisition deal. This is Alibaba’s first acquisition that involves a chipmaker.

Previously, Alibaba had invested in Hangzhou C-SKY Microsystems and has decided to increase its stake in the company to 100%. This is in line with the company’s growing interests in advancing in the chip industry, which was articulated in late 2017. This was revealed by a person close to the matter who spoke on condition of anonymity because the matter is private. According to the person however, this acquisition has something to do with the ongoing trade tensions between the United States and China which involve tit-for-tat tariffs.

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