As U.S. export licenses for Nvidia’s H200 AI processors remain pending final approval from the State Department, Alibaba Group Holding Ltd has stepped up its investment in in-house semiconductor design to reduce reliance on foreign suppliers. In recent weeks, Alibaba’s cloud computing unit increased its AI chip R&D budget by 30%, redirecting resources to its XuanTie series of high-performance accelerators. This move follows reports that Chinese enterprises paused new H200 orders while awaiting clarity on licensing conditions. In January, Beijing granted initial import approvals for Nvidia’s chips to three major internet firms, yet Alibaba has prioritized developing its own 7-nanometer and 5-nanometer AI accelerators, targeting volume production by late 2026. Investors will watch closely as Alibaba seeks to capture a greater share of China’s surging AI infrastructure market, projected to grow at a 35% compound annual rate through 2028.