China's Alibaba is preparing to list its chipmaking arm, T-Head, Bloomberg News reported on Thursday, citing people familiar with the matter.

Shares of Alibaba rose over 7% to $180.91 on the news, the highest since November last year.

As a first step, Alibaba plans to restructure the unit as a business partly owned by employees before exploring an initial public offering, though the timing remains unclear, the report said.

Reuters could not immediately verify the report. Alibaba did not immediately respond to a request for comment.

The process is still at an early stage and the potential valuation of the unit remains unclear, according to the report.

Founded in 2018, T-Head Semiconductor is Alibaba Group's wholly owned semiconductor chip unit, developing a range of processors from data center and artificial intelligence chips to Internet-of-Things products across the full chip design stack.

In November, Alibaba launched a major upgrade to its AI chatbot with a free consumer-facing app based on its most advanced Qwen large language model, as it stepped up efforts to close the gap with domestic rivals in China's AI race.