The company disclosed late Tuesday that it plans to offer shares in T-Head to the public in Hong Kong, subject to regulatory approvals from the stock exchange and the China Securities Regulatory Commission.
However, Alibaba did not provide details on the proposed size of the offering or when the listing might take place.
The latest announcement follows a confidential filing submitted by the company on September 11 as part of its efforts to list the semiconductor subsidiary on the Hong Kong Stock Exchange.
Despite the development, Alibaba’s Hong Kong-listed shares fell by about one per cent in early trading on Wednesday. The stock has lost approximately 29 per cent of its value since the beginning of the year.
The planned spin-off comes as Alibaba intensifies efforts to develop its own artificial intelligence chips amid growing competition in China's semiconductor industry and tighter restrictions imposed by the United States on Chinese access to advanced chip technology.
In September, the company unveiled its next-generation AI processor, the Zhenwu V900, which it said delivers three times the performance of its predecessor, the Zhenwu M890, launched in May.
Alibaba is among several Chinese technology companies, including Huawei, investing in locally developed semiconductors to support the country's growing artificial intelligence ambitions and reduce dependence on foreign chip suppliers.
However, the company's semiconductor activities have also attracted scrutiny. In May, short-selling firm Culper Research alleged that Alibaba had indirectly financed entities in Southeast Asia to obtain restricted Nvidia chips. Alibaba had not immediately responded to a request for comment on the allegations.
Meanwhile, developments involving Nvidia and allegations surrounding its chief executive, Jensen Huang, have added to volatility in technology stocks. Reports concerning an alleged relationship between Huang and a suspected Chinese spy linked to one of the entities have also weighed on market sentiment.
Amid the uncertainty surrounding technology stocks, US-based artificial intelligence company Anthropic disclosed in an updated filing on Tuesday that it plans to offer 825 million shares in its proposed initial public offering at a price range of $70 to $78 per share.
Trading on the Nasdaq is expected to commence on November 19, according to people familiar with the matter who spoke to CNBC on condition of anonymity because they were not authorised to comment publicly.
Chinese technology stocks have generally lagged behind their US counterparts, despite the investor enthusiasm generated last year by artificial intelligence advances from Chinese startup DeepSeek.
Other Chinese technology companies have also reportedly encountered delays in their planned semiconductor listings. Baidu is said to have postponed the proposed listing of its AI chip subsidiary, Kunlunxin, while memory chipmaker Yangtze Memory Technologies Company has reportedly faced a similar delay. Neither company immediately responded to requests for comment.
The developments come as Chinese financial regulators increase scrutiny of technology initial public offerings and the growing flow of investment into the country's technology sector.
The tighter oversight could complicate fundraising plans for semiconductor and artificial intelligence companies seeking to capitalise on investor demand while navigating regulatory requirements.