Alibaba Acquires Chinese Microchip Manufacturer

To expand its Internet of Things (IoT) business, Alibaba Group has acquired a Chinese microchip maker. The eCommerce retailer purchased Hangzhou C-SKY Microsystems, which supplies central processing unit (CPU) cores, CNBC reported.

An Alibaba spokesperson said in a statement, “Alibaba aims to empower different industries through our cloud-based IoT solutions, in which chips play a significant role. The acquisition of Hangzhou C-SKY Microsystems, a leading Chinese supplier of embedded CPU cores, underlines our commitment to driving the development of the chip industry.”

Alibaba was already an investor in Hangzhou C-SKY Microsystems but, with the new deal, it was upping its ownership to 100 percent. The terms of the deal were not made public.

The announcement comes after the U.S. placed a ban on U.S. companies from selling chips – and other components – to China’s ZTE Corporation for a period of seven years. That ban caused discussions within China about self-sufficiency for tech products.

The news also comes as Alibaba is in the process of acquiring food-delivery startup Ele.me for $9.5 billion. According to Fortune, the deal is part of Alibaba’s efforts to expand into China’s local-delivery market, which has grown at a rapid pace as more people turn to their smartphones to order food, schedule appointments and hire help. The deal was also a way for Alibaba to promote its payment service.

Alibaba paid all cash in the deal and acquired all the shares formerly held by Baidu, according to a source. As part of the deal, Ele.me Founder Zhang Xuhao will become chairman of the company, and Vice President of Alibaba Group, Wang Lei, will become chief executive officer of Ele.me.

Beyond food delivery, Alibaba is also interested in investing in the ridesharing platform Grab. The size of the potential investment and Grab’s future valuation with such a deal is not yet clear, TechCrunch reported. Though Grab had declined to comment on TechCrunch’s story, a spokesperson for Alibaba told the newswire that the company “doesn’t confirm on market rumors.”