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While Tencent Holdings is mostly known for having the world’s largest video gaming business by revenue and for operating multipurpose super app WeChat, the company has been making strategic investments in the semiconductor industry over the past few years. Photo: Shutterstock

Tencent launches three self-designed chips in expansion drive, helping boost China’s semiconductor development efforts

  • Tencent unveiled on Wednesday its Zixiao artificial intelligence chip, Canghai video transcoding device and Xuanling network interface controller
  • The internet giant’s semiconductor launch followed Alibaba’s introduction of its own self-designed Yitian 710 chip in October
Tencent Holdings launched three new self-designed chips on Wednesday, enabling the Chinese internet giant to play a role in the country’s development efforts in semiconductors and to further expand beyond video gaming, mobile payments and social media.
“Chips are the key components of hardware and the core infrastructure of the industrial internet,” said Dowson Tong Taosang, president of Tencent’s cloud and smart industries group, as he unveiled the three chips at the company’s Digital Ecosystem Summit in Wuhan, capital of central Hubei province.
The Shenzhen-based firm’s new silicon products include: artificial intelligence (AI) chip Zixiao, which is focused on processing images, video and natural language; video transcoding device Canghai; and network interface controller Xuanling.

Tong said Tencent has long-term plans for developing advanced chips, marking the first time the company has publicly shared the progress of its push into semiconductor research and development. Tencent did not reveal which major chip foundry it has contracted to manufacture the three silicon devices.

Tencent Holdings senior vice-president Dowson Tong Taosang, who also serves as president for its cloud and smart industries group, says the company has long-term plans in semiconductor development. Photo: Weibo
By designing its own chips, Tencent intensifies China’s push towards semiconductor self-sufficiency and the establishment of a competitive domestic supply chain for these devices.
Chip production is a priority in China’s 14th five-year plan from 2021 to 2025, as tensions between Washington and Beijing continue to heat up US-China tech rivalry. The country’s chip efforts are also expected to help counter a global semiconductor shortage.
The stakes are high for Tencent in the semiconductor industry after rival Alibaba Group Holding introduced last month its own general-purpose central processing unit, the Yitian 710, for its Panjiu servers that will drive the e-commerce giant’s vast cloud computing operation.
Alibaba and Tencent compete head-on in China’s vast cloud infrastructure services market, which was estimated to be worth US$6.6 billion in the second quarter. Alibaba Cloud had a market-leading 33.8 per cent share in that quarter, according to data from tech research firm Canalys. Tencent Cloud had an 18.8 per cent share in the same period to rank third behind the cloud unit of Huawei Technologies Co, which had a 19.3 per cent share.

At the Wuhan event, Tencent’s Tong pledged US$3 billion worth of resources to help the company’s cloud business partners over the next three years.

Tencent’s AI chip, Zixiao, has already entered trial production and performs 100 per cent better than existing products of its kind, according to company vice-president Qiu Yuepeng at the Wuhan event.

The compression rate of video transcoding chip Canghai has measured 30 per cent greater than existing chips of its kind, according to Tencent, citing a recent industry competition. Xuanling, meanwhile, performed four times better than other network interface controllers.

While Tencent is mostly known for having the world’s largest video gaming business by revenue and for operating multipurpose super app WeChat, the company has made strategic investments in the semiconductor industry over the past few years.
In January, Tencent took part in the US$279 million Series C fundraising round of AI chip start-up Enflame Technology. That marked the fourth time in more than two years that Tencent has invested in the Shanghai-based firm, which is now valued at 10.8 billion yuan (US$1.7 billion).

Shares of Hong Kong-listed Tencent rose 1.08 per cent on Wednesday to close at HK$469.