Jack Ma's Alibaba Teases In-House Semiconductor Chip; Macquarie Rates Company With Outperform

Alibaba Group Holding Ltd's BABA research outfit DAMO Academy has teased a chip that stacks logic and memory in 3D, the Register reports. Alibaba has indicated that the chip exists but did not give elaborate further.

What Happened: Alibaba's Yun on Chip (YoC) used the RISC-V architecture and its SIMD acceleration instructions and was co-developed with Hangzhou C-SKY Microsystem in 2015.

The chip serves multiple applications, including Bluetooth, Wi-Fi, audio, and multimedia. It also caters to the needs of AI acceleration, audio processing, mesh networking, and motor control.

Related Content: Alibaba Confirms It's Developing In-House Advanced Chips To Boost Cloud Computing Business

Chinese press suggests it represents an architecture that can bust the Von Neumann bottleneck. The bottleneck refers to the limitation most computer systems are vulnerable to as CPUs need to wait to fetch data from memory.

Why It Matters: Recent innovations like Apple Inc's AAPL M1 architecture and other system-on-chips place processor and memory on a single die and remove the need to communicate with memory outside the processor.

The February 2022's International Solid-State Circuits Conference features a talk on "184QPS/W 64Mb/mm2 3D Logic-to-DRAM Hybrid Bonding with Process-Near-Memory Engine for Recommendation System" in its stream on ML Chips for Emerging Applications.

Analyst Rating: Macquarie analyst Ellie Jiang resumed coverage of Alibaba with an Outperform rating and $162 price target, implying a 31% upside.

Alibaba is building a cohesive ecosystem. She sees the company benefiting from continued growth in China's e-commerce penetration, a natural extension of customer lifetime value, and an efficient cost structure.

Jiang expects increasing domestic retail penetration, international expansion, and other initiatives to drive a sustained compound annual growth rate of 15% in revenue over FY3/22-24. Jiang also thinks the stock's valuation has troughed at two standard deviations below its historical average.

Price Action: BABA shares traded lower by 1.83% at $123.24 in the premarket session on the last check Wednesday.