Overseas tech giants such as Alphabet Inc and Facebook Inc are also developing their own custom chips.
Alibaba Group Holdings Ltd said on Wednesday it has developed a new chip that specializes in machine-learning tasks and which will be used in services provided by its cloud computing division.
The chip, called Hanguang 800, is currently being used within Alibaba to power product search, automatic translation, and personalized recommendations on the e-commerce giant's web sites.
Alibaba has no immediate plans to sell the chip as a standalone commercial product, a company spokeswoman said.
Overseas tech giants such as Alphabet Inc and Facebook Inc are also developing their own custom chips, aiming to improve the performance of specialized AI tasks at company-operated data centers.
Alibaba's foray into the chip sector comes amid efforts by Beijing to promote China's semiconductor industry and reduce the country's reliance on foreign imports of core technologies.