From CXMT to Zhipu: How Alibaba’s investment pays off with a growing AI and chip portfolio

ChangXin Memory Technologies (CXMT) and Zhipu AI have not only seen their share prices skyrocket, but they have also handed a windfall to their common backer: Alibaba Group Holding.

Before the listing of China’s memory-chip giant on Monday, Alibaba owned nearly 5 per cent of CXMT, making it the chipmaker’s largest industrial shareholder, according to the prospectus. Alibaba has invested about 7.6 billion yuan in CXMT since 2021. Based on Tuesday’s closing market capitalisation of about 3.14 trillion yuan (US$464 billion), Alibaba’s stake was worth more than 140 billion yuan – nearly 20 times its reported investment.

These paper gains contrasted sharply with Alibaba’s previous high-profile investment. After acquiring a controlling stake in hypermarket operator Sun Art Retail in October 2020 for HK$28 billion (US$3.6 billion) – doubling its effective stake – it ended up with more than 25 billion yuan in impairment and disposal losses. Alibaba sold its entire stake in the company to Chinese private-equity firm DCP Capital for HK$13.1 billion on December 31, 2024.

As Alibaba refocuses on e-commerce and pivots towards artificial intelligence, it’s moved away from control acquisitions aimed at expanding a sprawling consumer-internet empire. Instead, it has shifted towards minority stakes and industrial partnerships across the AI supply chain.