The Chinese e-commerce giant Alibaba has announced acquisition of Hangzhou C-SKY Microsystems, a Chinese microchip maker. The deal aims at boosting Alibaba’s cloud-based “internet of things” (IoT) business,

Alibaba, E-commerce titan, has acquired a Chinese microchip maker Hangzhou C-SKY Microsystems with the aim to enhance development of its own chip industry.

The announcement follows the US ban for American firms to sell chips and other components to Chinese telecoms company for seven years. Such a move triggered a discussion concerning the need for self-sufficient tech supply chains in China.

Alibaba Group Holding was  set up in 1999 Jack Ma, a former English teacher from Hangzhou, China. The company’s pramary goal was to champion small businesses, in the belief that the Internet would level the playing field by enabling small enterprises to leverage innovation and technology to grow and compete more effectively in the domestic and global economies. 

Today Alibaba is a global e-commerce platform that connects buyers and suppliers around the world. Previously, it had invested in Hangzhou C-SKY Microsystems and now took its stake to 100 percent, in line with an interest in the chip industry articulated late last year. Moweover, C-Sky was the first chip company in the world to receive a sufficient investment from Alibaba.

Founded in 2001, Hangzhou-based C-SKY Microsystems develops embedded CPU and chip architecture. According to the company, it is the only embedded CPU volume provider in China with its own instruction set architecture. C-SKY Microsystems has already developed 7 types of embedded CPUs which cover a wide range of embedded applications, including smart devices in Internet of Things (IoT), digital audio & video, information security, network and communications,  industrial control and automotive electronics. Last year, the company has picked up 70 licensees        so far in China.

The acquisition seems to be successful and beneficial for Alibaba which has reportedly started developing a chip called Ali-NPU. The chip is designed for image recognition, video recognition, cloud computing to improve its computing power and to reduce the cost.“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,” a spokesperson said.

According to Alibaba, the purchase of C-SKY Microsystems will help unify the two companies’ R&D capability in China’s campaign to gain self-reliance in key technology. “Alibaba aims to empower different industries through our cloud-based IoT solutions, in which chips play a significant role,” the spokesperson said.

The terms of the acquisition are not revealed, but the deal points at a growing trend among companies, such as Google, Amazon, and Alibaba, to swallow up chip companies with a goal to design chips that fit their businesses.

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