Alibaba Sells Lingxi Games for $2 Billion to Fund Aggressive AI Pivot and Cloud Infrastructure

Alibaba is selling its gaming studio for at least $1.5 billion to help fund AI buildout, mirroring Micron's exit from consumer business -- dumps entire stake in Lingxi Games, which made 'Three Kingdoms: Strategy Edition'

Alibaba expects over $2 billion from offloading Lingxi Games to Trustar Capital. Alibaba has agreed to sell its game development unit, Lingxi Games, to Asian private equity firm Trustar Capital, according to an internal staff memo sent Monday by Lingxi CEO Zhou Bingshu, per Reuters. A person familiar with the matter told Reuters that Alibaba stands to collect more than $2 billion from the transaction, while Bloomberg, which first reported the memo, valued the studio at no less than $1.5 billion. The sale transfers Alibaba's entire stake in the studio and takes the Chinese tech giant out of in-house game development entirely, freeing up cash for an AI infrastructure program the company has already said will blow past its original $53 billion budget. "Alibaba is handing Lingxi to Trustar due to better focus on its strategic priorities," Zhou wrote in the memo, as quoted by Bloomberg. Zhou and his management team will stay on to run the studio under its new owner. The memo didn't disclose a price, an expected closing date, or any regulatory conditions attached to the deal, and none of the three companies responded to requests for comment. Alibaba committed at least 380 billion yuan (around $53 billion at the time) to cloud and AI infrastructure over three years in February last year, a sum the company said was larger than everything it had spent on AI and cloud in the previous decade combined. CEO Eddie Wu told analysts in May that Alibaba would exceed that figure given the cost of its data center buildout, and the company is targeting $100 billion in AI revenue within five years. Asset sales are covering part of the bill, with Alibaba having offloaded its stakes in hypermarket chain Sun Art and department store operator Intime for a combined $2.6 billion in late 2024. Back in January, it was reported that the company is preparing an IPO for its chip design unit T-Head, another route to capital for the same program. T-Head designs the PPU accelerator that Chinese state television compared against Nvidia's H20 last September, and its silicon is central to Alibaba's plan to run more of its cloud on domestic hardware. Guangzhou-based Lingxi is best known for Three Kingdoms: Strategy Edition, a mobile multiplayer strategy title developed with Japan's Koei Tecmo. It's understood that Alibaba had been shopping the studio around for some time, per two unnamed sources, and a fundraising process Lingxi explored in late 2023 stalled after Beijing proposed tighter rules for the online gaming sector. Trustar, formerly known as CITIC Capital, is an Asia-focused private equity firm that Zhou described in the memo as having the industry resources to support the studio's next phase. The sale leaves Alibaba's consumer business focused on e-commerce and its Qwen chatbot, whose own team leadership put Chinese firms' odds of leapfrogging OpenAI and Anthropic at less than 20% earlier this year. Follow Tom's Hardware on Google News, or add us as a preferred source, to get our latest news, analysis, & reviews in your feeds.

Alibaba sells its Lingxi games arm to fund an all-in bet on AI

The Chinese giant is offloading a profitable gaming studio to private equity so it can pour every spare yuan into Qwen and its data centres, though the buyers and sellers cannot agree on what the studio is worth. Alibaba is selling its gaming subsidiary, Lingxi Games, to the Asian private-equity firm Trustar Capital, in a deal that neatly captures where the company's priorities now lie. The games, it turns out, were never the point. The point is artificial intelligence, and everything else is now for sale to pay for it. The maths of the transaction is where things get slippery. Reuters framed the deal as worth more than $2bn, while Bloomberg pegged it at over $1.5bn, a gap of half a billion dollars that neither side seems in a hurry to reconcile. Whatever the final figure, it is small change against Alibaba's ambitions, which increasingly run through its Qwen AI models and its Taobao shopping empire rather than its entertainment holdings. Lingxi is not some struggling afterthought being quietly dumped. Its flagship title, Three Kingdoms: Strategy Edition, is a multiplayer strategy game built with Japan's Koei Tecmo, and it has been a reliable earner. That is precisely what makes the sale striking: Alibaba is parting with something that works, because it no longer fits the story it wants to tell. That story is being written by chief executive Eddie Wu, who has spent the past year restructuring Alibaba around two pillars, AI and cloud computing, while systematically shedding anything deemed non-core. Gaming, however profitable, falls firmly into the latter category, and it is being cut loose with the same ruthless efficiency Wu has applied elsewhere. The company is not shrinking so much as sharpening. Lingxi's own leadership has adopted the corporate line with striking discipline. Chief executive Zhou Bingshu said Alibaba was "handing over the business to allow it to focus more closely on its strategic priorities", which is about as gracious a way as any to describe being sold off so your parent can go and chase something shinier. And the shinier thing is enormous. Alibaba is targeting $100bn in AI revenue over the next five years, a number so vast it makes a couple of billion from a games studio look like a rounding error. To hit it, the company needs capital, capacity and focus, and selling Lingxi delivers a modest slug of all three. The technology is arriving to match the rhetoric. Alibaba recently launched its largest AI model yet, extending its Qwen line with its most capable system to date, and has claimed performance comparable to Anthropic's technology. That is a bold comparison, and one that has not gone unnoticed by the American lab it is measuring itself against. It has also invited scrutiny. Anthropic has accused Alibaba of running the largest distillation campaign against Claude, a charge that hangs awkwardly over every claim of home-grown parity. Building a frontier model is expensive, and the temptation to shortcut the process by learning from a rival's outputs is exactly the sort of accusation that follows fast movers. Investors, for their part, approved of the tidy-up. Alibaba's Hong Kong-listed shares rose about 2.67% on the report, a reminder that the market tends to reward focus, and that a games studio, however beloved by its players, does not feature prominently in the thesis analysts have built around the company. The move also fits a broader pattern across China's technology sector. The era of empire-building, in which giants collected businesses across gaming, retail, logistics and media, is giving way to a colder logic of pruning, as the same firms race to fund the AI and data-centre spending they now regard as existential. Alibaba, in other words, is selling the games to buy the future. It is a coldly rational trade, and one that leaves Lingxi in the hands of a buyer that actually wants to run a games company. Whether that future is worth more than $1.5bn or more than $2bn, nobody can quite say. What is clear is that Alibaba would rather spend it on Qwen.

Alibaba's $2 billion gaming exit signals where Beijing wants its money | Fortune

Alibaba is getting rid of its video game development arm for more than $2 billion, removing the Chinese tech giant from the in-house game development space entirely as it looks to double down into the AI sector. Alibaba has agreed to sell Lingxi Games, the studio behind the mobile hit Three Kingdoms: Strategy Edition, to private-equity firm Trustar Capital, Bloomberg reported. While the studio is reportedly valued between $1.5 billion and $2 billion, the companies have not publicly disclosed a price. "Alibaba is handing Lingxi to Trustar due to better focus on its strategic priorities," Lingxi CEO Zhou Bingshu wrote in an internal staff memo according to Reuters. Some of those strategic priorities for Alibaba include AI and cloud computing, which currently sit at the center of Beijing's economic strategy. "It's just cleaning up the cap table," Rui Ma, a China tech analyst and founder of China-focused research platform Tech Buzz China, told Fortune. In February last year, Alibaba pledged about $53 billion over three years on AI and cloud infrastructure, more than it spent on those areas over the previous decade. In May, CEO Eddie Wu told analysts the company would likely exceed that figure thank to increased data center buildout costs. The company is targeting $100 billion in AI revenue by 2031. From having 'many pieces on the board' to AI and cloud Alibaba's sprawling strategy made more sense when its dominant e-commerce business was throwing off enough cash to fund bets across a wide range of industries. "It's just purely them executing on their plan of cleaning up non-core assets, making returns higher," Ma said. But domestic competition from companies including Pinduoduo and Meituan changed that equation. "They couldn't just kind of ride the cash flow from e-commerce and then just invest in whatever is interesting," she said. "They had to really focus." Ma described Lingxi as a remnant of an earlier Alibaba that tried to put "many pieces on the board." Gaming was also never one of Alibaba's strongest businesses, according to Ma, with rival Tencent being a global gaming powerhouse -- but AI offers a different proposition. Alibaba entered the AI boom with one of China's leading cloud businesses already in place, giving it both the infrastructure needed to build AI products and a potential way to monetize them. Ma said Alibaba has maintained a strong position in Chinese cloud missing word while developing a credible model strategy, although competition remains fierce. Beijing's playbook The commercial logic is only part of the picture, according to Usha Haley, a professor at Wichita State University who has researched Chinese state support for domestic companies and testified before Congress. For Haley, strategic decisions by large Chinese companies cannot be neatly separated from Beijing's industrial priorities. Chinese companies, she said, have strong incentives to put resources into sectors the government has identified as strategically important like AI and cloud infrastructure. "Alibaba-and this is all like all the private companies that we've spoken to in our research-it just has to see where government interests lie, and the government interests are clearly communicated," Haley told Fortune. Alibaba's Qwen models have pushed the company into the global AI race. Users downloaded Qwen's open-weight models more than 3 billion times over the previous six months, putting Alibaba ahead of Meta and Google by that measure.

Alibaba's AI Pivot Deepens, Plans to Offload Gaming Business For at Least $1.5 Billion: Report - Apple (N

Alibaba Group Holding Ltd. ADR (NYSE:BABA) is reportedly offloading its gaming unit, Lingxi Games, to Asian private-equity firm Trustar Capital in a bid to bolster its focus on artificial intelligence (AI). The Chinese tech behemoth is selling Lingxi Games for a minimum of $1.5 billion. The exact transaction size was not disclosed by Lingxi Games Chief Executive Zhou Bingshu, who stated that the sale is "part of Alibaba's overall road map to sharpen its strategic focus," The Wall Street Journal reported on Monday, citing an internal memo. Alibaba stock climbed 1.08% during the Monday pre-market trading session. Alibaba did not immediately respond to Benzinga's request for comments. Alibaba Sharpens Focus On AI This divestiture comes at a time when Alibaba is making significant strides in the AI industry. Alibaba's AI model downloads have seen a substantial surge in the last six months, surpassing those made by Meta Platforms Inc. (NASDAQ:META) and Alphabet Inc. (NASDAQ:GOOG). With over 460 open-source models, Alibaba's AI models have become the largest in the world, generating more than 300,000 derivatives. Alibaba's AI models have gained traction after Apple Inc. (NASDAQ:AAPL) began using them in China, but Apple is now reportedly developing its own AI models for the Chinese market with Alibaba's support. Markets Anthropic and OpenAI Revenues Soar, But a New Threat is Emerging Anthropic and OpenAI have seen their revenues surge this year, but a new Chinese threat is emerging that may derail their plans 3 min read Read this article The Chinese tech giant has been streamlining its portfolio by making non-core businesses profitable or selling them, freeing resources for AI and e-commerce investment. In late 2024, it sold stakes in Sun Art and Intime for a combined $2.6 billion. Gaming Stays Hot as Firms Retreat Meanwhile, the gaming industry continues to thrive, with companies like Take-Two Interactive Software Inc. (NASDAQ:TTWO) reporting strong fiscal first-quarter results and unprecedented pre-orders for its new game. Latest Private Market Opportunities Join 400,000+ Investors Despite gaming being a highly lucrative and major focus for tech investment, some companies are pulling back, with ByteDance selling its gaming studio Moonton earlier this year. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Markets Meta, TikTok, Google and Snap Just Lost a Major Court Battle -- and Must Face More Than 3,000 Lawsuits Over Addictive Platforms Targeting Young Users Meta, TikTok, Google and Snap face 3,000+ lawsuits alleging their platforms are addictive and target young users. 2 min read Read this article Image via Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.