- Alibaba exits in-house game development after 12 years, shifting resources toward AI and cloud infrastructure
- The deal highlights how China’s tech giants are shedding non-core assets to fund the AI race
Alibaba has agreed to sell its game business Lingxi Games (灵犀互娱) to Trustar Capital (信宸资本), a private equity firm under CITIC Capital, for more than $1.5 billion, according to multiple media reports on August 14.
Several listed Chinese game companies, including 37 Interactive Entertainment, Giant Network and China Ruyi, had previously entered the bidding but were ultimately eliminated.
Lingxi’s roots date back to Alibaba’s acquisition of UC in 2014 and the integration of its Jiuyou gaming business.
Alibaba formally entered self-developed games in 2017 after acquiring Guangzhou JianYue, founded by former NetEase COO Zhan Zhonghui (詹钟晖).
The business reached a high point in 2020 with the hit strategy game Three Kingdoms: Strategy Edition. Lingxi was elevated into an independent business group alongside Alibaba’s broader entertainment division, and there was even speculation that it could pursue a standalone listing.
But the company failed to produce another hit on the same scale. According to Sensor Tower data, Lingxi’s global revenue fell from nearly 6 billion yuan in 2022 to 2.37 billion yuan in 2025.
Its position within Alibaba also became increasingly uncertain, with its reporting structure changed seven times before ultimately coming under CFO Xu Hong (徐宏) in August 2025, a move widely viewed as a precursor to a potential asset sale.
Why trustar bought it
Trustar Capital manages more than $14 billion and has historically focused on mature businesses, including McDonald’s China and SF Express.
Analysts say the firm is likely betting less on a gaming boom than on Lingxi’s relatively stable cash flow.
Maintaining the existing team and monetizing established titles could provide a path toward a future IPO or another asset sale.
For Alibaba, the transaction marks the end of a 12-year push into self-developed games.
The company has increasingly prioritized AI and cloud infrastructure. After putting “user first” and “AI-driven” at the center of its strategy, Alibaba has committed roughly 380 billion yuan to AI and cloud infrastructure over three years.
Gaming, which generates an estimated 3 billion to 4 billion yuan in annual revenue and accounts for less than 2% of Alibaba’s overall revenue, has consequently become a non-core asset.
The sale reflects a broader shift among China’s internet giants. As companies including ByteDance and Alibaba divest gaming and retail assets, capital and management attention are increasingly being redirected toward AI infrastructure.
For international observers, Lingxi’s sale is more than a gaming deal. It shows how AI is reshaping capital allocation across China’s technology sector, with computing infrastructure increasingly taking priority over content and traffic-driven businesses.
