China Taps Alibaba, Tencent To Beat US Sanctions

China has enrolled tech giantsAlibaba Group Holding LimitedBABA andTencent Holding LtdTCEHY to aid its efforts in designingsemiconductor chips to reduce its dependenceonSoftbank Group CorpSFTBF SFTBY -owned Arm. Arm, headquartered in the U.K. but has significant operations in the U.S., is seen as vulnerable to any ramping-up of U.S. sanctions, Financial Timesreported. The Chinese government has established a consortium of companies and institute Beijing Open Source Chip Research Instituteto create new chip intellectual property. The group used Arm's rival Risc-V, an open-source chip design architecture, to create Xiangshan, a high-performance Risc-V computer-processing chip aimed at matching Arm's IP and boosting the development of a Chinese chip design market. Before Beijing's push to combine resources, Chinese tech giants Alibaba and ByteDance had already set up teams using Risc-V architecture to develop high-performance chips that power AI algorithms and data centers. However, Alibaba's chip arm T-head executive finds it a distant goal to develop Risc-V-chips to replace the existing Arm ones T-head due to falling profits at its parent company. ByteDance Ltdsaid its work was in the preliminary stage, while Alibaba said its development capability was mainly in the Internet of Things sector. "You don't know when the next round of U.S. restrictions will come . . . using Arm's architecture is too risky now, it's like exposing your biggest weakness to the enemy," said a Tencent engineer. Rene Haas, Arm's CEO, said Arm has a significant advantage because it offers software alongside its designs and has a community of 50 million developers. Intel CorpINTC said Risc-V "has traction in embedded markets and is expected to make inroads into IoT, automotive, mobile and datacentre markets in the next 3-5 years". However, it added that the open-source architecture is "still in its infancy and needs the support of the ecosystem to innovate further and drive market adoption." However, several of Arm's biggest customers, likeQualcomm IncQCOM ,are not yet convinced about Risc-V's potential. Photo by Body Stock and Dragon Claws by Shutterstock