Alibaba, a major backer of AI startup Moonshot, has been pushing portfolio companies to use its cloud, and Moonshot’s Kimi K3 model runs on Alibaba’s infrastructure while outperforming Alibaba’s own Qwen models on key measures, disappointing some Alibaba staff. The roughly 20,000 processors in the Alibaba arrangement are Hopper-generation chips, not Blackwells, with sources saying the agreement covers H200s, the most powerful Hopper chips. Alibaba’s spokesperson denied supplying H200-powered computing to Moonshot, did not deny a 20,000-chip arrangement, and would not identify which chips are involved. Moonshot, Alibaba, and Nvidia would not comment. K3, released this month as an open-source model, performs at or near the level of leading U.S. models on several benchmarks, making it a test case for whether China can reach the frontier despite U.S. export controls. Washington has barred China from buying Nvidia’s most powerful chips and obtaining equipment to build its own AI processors, while U.S. corporations have invested hundreds of billions of dollars in data centers. K3 alarmed officials in Washington, financiers on Wall Street, and technologists in Silicon Valley, echoing the disruption caused by DeepSeek last year. Nvidia’s strongest Hopper chips always required an export license for China; the less capable H800 and H20 models now need U.S. approval