Alibaba establishes "CiYuan Factory" to accelerate the creation of AI tools

Alibaba's "shovel-making" plan is accelerating with renewed focus.

In March of this year, Alibaba established the ATH business group, further consolidating its AIToC business; three months later, on June 8th, Alibaba took another step, announcing the merger of the Tongyi Large Model Division and Future Life Lab, and the creation of the brand-new TokenFoundry Division.

Meanwhile, Zhou Jingren, the soul of the Tongyi system, was promoted to Alibaba's Chief Scientist, leading the formation of the Alibaba AI Future Research Institute. Alibaba Vice President Zheng Bo brings both the HappyHorse and HappyOyster business lines, which have been integrated into the new TokenFoundry.

The new TokenFoundry Division belongs to the ATH business group, which, after restructuring, is divided into six parts.

The newly established TokenFoundry Division is led by Group CEO Wu Yongming and consists of the Tongyi Large Model Division and Future Life Lab; the MaaS business line is responsible for building an efficient and open model service platform and technology system to support the overall AI ecosystem.

The Qianwen Division is led by Group Vice President Wu Jia, focusing on Alibaba AI's entry point at the C-end; the Wukong Division, led by Wuzhao, is creating a B-end AI-native work platform; the Innovation Division is comprised of several super unit teams, responsible for cutting-edge exploration, innovative applications, and new project incubation; the AI Future Research Institute is led by Vice President Zhou Jingren.

Back to the newly established TokenFoundry (Lexeme Factory), you can tell from the name that Alibaba intends to accelerate the "shovel-making." To understand the reason behind this structural adjustment, you need to look first at Alibaba's internal "530" Token campaign.

In April this year, Alibaba set a new internal target: by the end of May, the token revenue must reach five times that of early April, and by year-end, thirty times. The supporting incentive mechanisms are also very strong, including high commissions, cross-department resource coordination, and end-to-end integration of sales and solution lines.

Driven by bonuses and pressure, the five-fold target was achieved half a month ahead of schedule.

The first battle was won, but Alibaba's pressure did not ease.

A person close to Alibaba's customers told Wallstreetcn that after the internal team went ALL IN in May, token sales in June needed new momentum. The next increments depend on Qwen-3.7-Max.

In fact, just three weeks ago, Alibaba fine-tuned Qwen-3.7-Max specifically for Agents, achieving major breakthroughs in programming, intelligent agent, and reasoning capabilities, with performance approaching GPT, Claude, and Gemini.

In the fourth quarter of the 2026 fiscal year (January 1, 2026 – March 31, 2026), AI business was disclosed separately for the first time, marking a shift from pure investment stage to commercialization cycle, and the capital markets responded favourably.

By any single metric, Alibaba's AI is trending upward. But the track has never had only Alibaba running.

In the Agent era, players are scrambling for the token cake.

By the end of March this year, Doubao's large model's daily average token calls exceeded 120 trillion, doubling in just a month; Volcano Engine achieved 10 times the full-year token revenue target in a single quarter.

Doubao occupies a national-level C-end entrance like Douyin (TikTok China), making it almost impossible for the short video industry's AI transformation to bypass it. Volcano Engine's salespeople use Douyin's ecosystem ticket to negotiate with clients, truly embodying a "winning by lying down" feeling.

Therefore, Alibaba must accelerate the refinement of its models' product strength and speed up its market expansion.

A person familiar with Alibaba told Wallstreetcn, "This adjustment streamlines the model business further, making it more focused and valued." He further explained, "The previous Happy series models were exploratory in nature, but in the long run, they must become productivity tools."

In April this year, Wu Yongming mentioned in an Alibaba Cloud internal all-hands meeting that the team must act more aggressively than startups during the transformation. Alibaba Cloud's task this year is to rebuild infrastructure for Agents, to become the best AI training factory and AI inference factory.

This latest round of structural adjustment is nothing more than the landing of the plan set two months ago.

Alongside organizational restructuring, Alibaba Cloud is also aligning its expectations for performance growth. Over the next five years, Alibaba Cloud's external revenue annual compound growth rate is expected to exceed 40%. If achieved, this would return to the high-growth period before 2021.

Therefore, Alibaba's "shovel-selling" battle is essential and cannot be lost.

The greatest curiosity about TokenFoundry from the outside is whether this division can complete the thirty-fold curve by year's end. Based on public data, thirty times means Alibaba's monthly token income must multiply from the April baseline to reach a 120-fold annualized level.

Thus, Wu Yongming personally is in charge of this new division, underscoring TokenFoundry's status and importance.

In recent years, businesses directly overseen by the CEO at Alibaba often share two characteristics: high strategic weight and complex organizational coordination. TokenFoundry evidently matches both.

It needs to coordinate between cloud, models, chips, sales, ecosystem, research institute, and several other lines; any vice president-level leader would find it hard to mobilize internal resources without friction.

Wu Yongming's direct involvement is equivalent to giving this division a "high priority" pass. This tactic is not unfamiliar in Alibaba's history; when cloud computing was put under Zhang Yong's direct control, DingTalk was incorporated into the Cloud Intelligence Group, always following the same logic: at pivotal moments in key tracks, someone who can mobilize the entire group’s resources must press the accelerator.

The Agent era is approaching faster than anyone expects. As model capability gaps gradually narrow, the focus of competition shifts rapidly to "who can make the model run in real business."

Players like Alibaba, who can integrate cloud, models, chips, and ecosystem, remain scarce in China, but with fierce competition, Alibaba must accelerate building its own token ecosystem to secure the endgame win.

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