Product & chips · Aug 23, 2026

What does Alibaba tell analysts when quarterly net profit falls 75% and capital spending rises 75%? Switch to chips we design ourselves.

Chips & semiconductors · This week (reported August 21)

From the Aug 23, 2026 daily brief

On Alibaba's Q2 2026 earnings call, chief executive Eddie Wu told analysts the company will lean harder on chips designed in-house by its subsidiary T-Head and run in its own data centres; the report does not say whether any will be sold externally. He expects profit and gross margin to improve as those chips "account for an increasing proportion of total chips and replace commercially procured chips" (Data Center Dynamics, 08-21). T-Head is Alibaba's chip-design subsidiary, building RISC-V processors and AI accelerators. Three results figures from the same call: quarterly capital spending of US$10.07B, up 75% year on year; quarterly net profit down 75% year on year; AI and cloud product revenue of US$7.139B, up 45%, of which AI-specific items were US$1.82B — a subset of that revenue, not a separate line beside it. The two 75% figures are a coincidence, not two sides of one number.

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What does Alibaba tell analysts when quarterly net profit falls 75% and capital spending rises 75%? Switch to chips we design ourselves.

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More in this section

Customers of chip-design tool vendors have started capping tokens engineer by engineer — and a year ago nobody cared what that line cost.

The new flagship's enterprise edition went live with its first published prices, and its own account of the mechanism doubles as an audit cost.

OpenAI says its first in-house inference chip delivers 1.5 to 1.9 times the throughput per watt of "the commercial systems tested" — and does not say which systems those were.

Meta launched a personal AI agent called Muse, and the part worth recording is not what it does but that a payment network has written terms for a non-human buyer for the first time.