Chinese e-commerce giant Alibaba Group Holding (NYSE: BABA) confirmed on Tuesday plans to develop its own processor that would be used to run its Cloud computing business.

What happened: The Yitian 710 server chip is developed by Alibaba’s in-house T-Head semiconductor unit.

The design is based on the architecture of the British chip manufacturer Arm Holding and uses the 5 nm technology, which has been in development since 2019, which is intended to increase Alibaba’s cloud services through the use of performance and energy efficiency.

Why it matters: The semiconductor foray replicates similar steps taken by competing computer gamers such as Huawei technologies and Inc (NASDAQ: AMZN).

Alibaba was the leading cloud provider in China in the second quarter, and its share of the Chinese cloud market was 33.8%, according to a report released by Canalys.

The Chinese government has also urged industry leaders to invest in the domestic chip sector as the global …

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