According to people familiar with the matter, Alibaba Group Holding Ltd. is advancing plans for an initial public offering of its semiconductor design unit, T-Head. The unit, which develops AI inference and edge-computing chips, generated an estimated RMB 2.3 billion (approximately USD 320 million) in revenue in the first half of fiscal 2025, up more than 45% year-on-year. Alibaba has engaged banks including Goldman Sachs and CICC to advise on valuation, targeting a potential market capitalisation in excess of USD 10 billion. The IPO could take place in late 2026, with shares denominated in Hong Kong dollars. Proceeds are expected to fund continued R&D into next-generation neural-network accelerators and to support capacity expansion at an affiliated foundry partnership.

Investors are closely watching Alibaba Cloud as it contends with intensifying competition from ByteDance. In the first three quarters of 2025, Alibaba Cloud reported year-over-year revenue growth of 28%, capturing a 9.8% share of the China public cloud market, according to Canalys. ByteDance’s cloud division, launched in mid-2023, has already claimed roughly 3.5% market share by leveraging its AI video-optimization tools and lower price points. Analysts at UBS expect Alibaba to invest an additional USD 1.2 billion in data-center capex next fiscal year to defend its leadership position, while R&D expenditure on proprietary AI models is forecast to rise by 35% year-on-year.