By Gao Yuan and Debby Wu

(Bloomberg) -- Alibaba Group Holding Ltd. is preparing to list its chipmaking arm, tapping strong investor interest in the small circle of companies aspiring to compete with Nvidia Corp. in the hot AI accelerator business.

As a first step, Alibaba plans to restructure the unit as a business partly owned by employees, people familiar with the matter said. The company will then explore an initial public offering though the timing for that remains unclear, the people said, asking to remain anonymous discussing private plans. Alibaba’s American depositary receipts rose more than 5% in US pre-market trading.

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The company is still at the early stages of the process and it’s unclear how much of a valuation T-Head could command. Debuts by rival chipmakers such as Moore Threads Technology Co. have drawn strong interest, reflecting bets that Beijing will prop up the industry as an alternative to American technology. The largest listed player in this space, Cambricon Technologies Corp., is valued at roughly $80 billion. Alibaba representatives didn’t respond to an email seeking comment.

Alibaba has long explored chip design, seeking to secure a supply of the crucial components that underpin its data centers and AWS-like cloud services. AI chips are one facet of a broader campaign to become a leading AI company that rivals the likes of OpenAI.

Alibaba has been among the most aggressive investors in and advocates for AI since DeepSeek fired up the local tech industry. Chief Executive Officer Eddie Wu has pledged more than $53 billion toward infrastructure and AI development — an outlay he’s said the company could surpass over time.