Alibaba Cloud, the digital technology and intelligence backbone of Alibaba Group, has announced its latest contribution to the open-source community by open-sourcing its 7-billion-parameter Large Language Models (LLM), Qwen-7B and Qwen-7B-Chat, through its AI model community ModelScope, and the collaborative AI platform Hugging Face.Alibaba Cloud introduced its proprietary LLM, Tongyi Qianwen, earlier this year in April. This cutting-edge model, capable of generating human-like content in both Chinese and English, has different model sizes, including seven billion and above parameters. This time, the open-source release includes the pre-trained 7-billion-parameter model, Qwen-7B, and its conversationally fine-tuned version, Qwen-7B-Chat.

In an effort to democratize AI technologies, the models' code, model weights, and documentation will be freely accessible to academics, researchers and commercial institutions worldwide. For commercial uses, the models will be free to use for companies with fewer than 100 million monthly active users. Programs with more users can request a license from Alibaba Cloud.

"By open-sourcing our proprietary large language models, we aim to promote inclusive technologies and enable more developers and SMEs to reap the benefits of generative AI," said Jingren Zhou, CTO of Alibaba Cloud Intelligence.

"As a determined long-term champion of open-source initiatives, we hope that this open approach can also bring collective wisdom to further help open-source communities thrive." The Qwen-7B was pre-trained on over 2 trillion tokens, including Chinese, English and other multilingual materials, code, and mathematics, covering general and professional fields. Its context length reaches 8K.

In training, the Qwen-7B-Chat model was aligned with human instructions. Both Qwen-7B and Qwen-7B-Chat models can be deployed on cloud and on-premises infrastructures. This enables users to fine-tune the models and build their own high-quality generative models effectively and cost-efficiently. The pre-trained Qwen-7B model distinguished itself in the Massive Multi-task Language Understanding (MMLU) benchmark, scoring a notable 56.7, outperforming other major pre-trained open-source models with similar scales or even some larger-size models. This benchmark assesses a text model's multitask accuracy across 57 varied tasks, encompassing fields such as elementary mathematics, computer science and law.

Moreover, Qwen-7B achieved the highest score among models with equivalent parameters in the leaderboard of C-Eval, a comprehensive Chinese evaluation suite for foundational models. It covers 52 subjects in four major specialities including humanities, social sciences, STEM and others. Additionally, Qwen-7B reached outstanding performance on benchmarks of mathematics and code generation, such as GSM8K and HumanEval.

Alibaba Cloud's Qwen-7B model distinguished itself in several benchmarksIn July, Alibaba Cloud also introduced its AI image generator, Tongyi Wanxiang, which was designed to support developers and SMEs in their creative image expression. The cloud pioneer also unveiled ModelScopeGPT, a versatile framework designed to assist users in performing complex and specialized AI tasks across language, vision and speech domains by leveraging various AI models on ModelScope.

Launched by Alibaba Cloud last year, ModelScope is an open-source AI model community currently featuring over 1,000 AI models contributed by 20 leading AI institutes. For more information, please check out the details of Qwen-7B and Qwen-7B-Chat on ModelScope,Hugging Face and GitHub pages.About Alibaba CloudEstablished in 2009, Alibaba Cloud (www.alibabacloud.com) is the digital technology and intelligence backbone of Alibaba Group. It offers a complete suite of cloud services to customers worldwide, including elastic computing, database, storage, network virtualization services, large-scale computing, security, management and application services, big data analytics, a machine learning platform and IoT services.

Alibaba maintained its position as the third leading public cloud IaaS service provider globally since 2018, according to IDC. Alibaba is the world's third leading and Asia Pacific's leading IaaS provider by revenue in U.S. dollars since 2018, according to Gartner.

While more employers have voiced interest in skills-first hiring, credential use is still deeply uneven in the hiring process — meaning employers have an opportunity to widen their talent pools and value credentials appropriately, a Workcred study released Aug. 16 indicates.

The study focused on manufacturing employers and related credentials, in part due to this industry’s rising skills crisis. Workcred’s study cites research from Deloitte and the Manufacturing Institute, stating that while 3.5 million manufacturing jobs may be needed over the next decade, a skills mismatch may prompt more than 2 million of those jobs to go unfilled. And the industry also faces a coming retirement wave, putting further pressure on talent acquisition professionals, the study noted.

Multiple studies confirm that “manufacturing facilities are impacted by digitization at every point along the value chain,” the report said, noting that digitization’s impact will a vary according by industry sub-sector. “This change will require workers to be trained to use these new digital tools. It will also require employers to develop workforce planning and recruitment strategies that are agile and capable of finding individuals with the right skills sets.”

Credentials may not signal value yet

The study concluded that many manufacturers don’t view credentials as “the most relevant” tools to find new workers and that many did not know or understand the nature of these credentials and whether they would add value, such as reduced cost of talent acquisition or reduced training time. 

This contrasts with manufacturers’ continued investment in training, meaning many employees are extensively skilled without a way to showcase or validate those skills, the report said. 

Employees and company leaders interviewed mentioned that a lack of “readily available information” on credentials limited their value; supervisors said they relied on recommendations regarding the value of such credentialing; and many still signified a desire to see such skills proven in an employee’s work. 

While credentials signaled experience and relevant skills, on-the-job work was still the key way most Tested workers’ abilities, the report said.

Upskilling more mindfully is a solution

Employers also indicated a lack of tracking of such credentialing internally, as well. 

Workcred’s report recommended that employers capture formal training with credentialing, such as digital badges, to signify the kind of skills each worker has earned on the job. Job descriptions, as well, should be retooled to indicate what kind of credentials and skills the company values and needs, as that can be a useful sign for both workers and educators in what kind of skills are needed in the current market.

“If employers clearly signal the skills and competencies they value in job descriptions, and regularly update them, credential issuers will have a trusted source from which to get this information,” researchers said.

Semiconductor manufacturers are wrestling with how to secure a highly specialized and diverse global supply chain, particularly as the value of their IP and their dependence upon software increases — along with the sophistication and resources of the attackers.

Where methodologies and standards do exist for security, they often are confusing, cumbersome, and incomplete. There are plenty of gaps, particularly among some of the smaller suppliers of IP, equipment, and materials, where security remains primitive at best. This is partly due to the fact that in the past, much of the focus was on vulnerabilities in chips and chipmakers. But there is an increasingly high level of interdependency between companies in the semiconductor industry. The number of interactions is growing as complexity increases, and as chip designs become increasingly heterogeneous. The weakest link puts the whole supply chain at risk, and it’s estimated that more than 50% of security threats are introduced by suppliers.

Manufacturing is a particularly high-value target, where stolen data can be used to jump start competition in highly complex technology. Even when attacks are successfully blocked, any breaches or inroads made by the attackers can increase delivery times, and they add costs for investigating the cause of the breach and the required remediation. They also are embarrassing for the victims of those attacks, which need to explain to customers and regulators what went wrong, when it happened, and what, if any action, was taken.

The industry is well aware of the widening threat landscape. Collaboration was a major theme at the Cyber Security Forum during this year’s SEMICON West. Heads of security at Intel, TSMC, Applied Materials, ASML, Lam Research, and PEER Group all pointed to the need for securing interactions between industry stakeholders, as well as security standards and processes that prevent data breaches and leakage — but without making security so burdensome that it gets in the way of doing business.

Security remains a challenge for every facet of technology, and it becomes more challenging as more processes and equipment are connected to the internet and to each other. No security is perfect, and no one solution is sufficient. Good security is a process, and requires a secure-by-design attitude, as well as resilience throughout the supply chain. As vulnerabilities arise, they need to be evaluated and addressed.

At SEMICON, several chief information security officers (CISOs) pointed out that some 60% to 90% of impactful security issues were introduced by a supplier.

Vulnerabilities, barriers, solutions
Successful breaches can have widespread effects. They can delay shipments, leak IP, and cause operational downtime. They also can result in infected products and impact a company’s brand.

Sharing data in the cloud or by other means, and the rapid adoption of smart manufacturing, have only increased awareness of the risks. Joon Ahn, vice president in IT division at Amkor Technology summarized the security gaps to be considered:

• Connectivity vulnerabilities: Smart manufacturing technologies rely on connectivity to function, but this also can create vulnerabilities. Hackers try to gain access to sensitive systems through unsecured network connections.
• Data breaches: The increased use of connected devices and data sharing can increase the risk of data breaches. If sensitive data is not properly secured, it can be accessed by unauthorized users.
• Physical security: As factories become more automated, physical security becomes increasingly important. Unauthorized access to the factory floor can result in equipment damage or theft.
• Insider threats: Employees who have access to sensitive systems and data can pose a security risk if they engage in malicious activities or inadvertently compromise security through human error.

Threats can come from many directions, and they can target everything from IT to facilities to operational technology.

Robert Ivester, senior advisor for semiconductor engagement at the National Institute of Standards and Technology (NIST), pointed out in his description of operational technology that manufacturers and their supply chains increasingly depend on a broad range of programmable systems and devices that interact with the physical environment. That includes industrial control systems and building management systems.

Facilities, meanwhile, involve more than just a building. “We talk about facilities security because a machine cannot run without power, chemicals, gases, and also waste process management,” said James Tu, head of corporate information security at TSMC. “Facility security is critical to meet because it’s a safety issue. We focus on a combination of the facility security and infrastructure security.”

Others agree. “To address these security gaps several steps can be taken, such as conducting risk assessments, training employees, and implementing physical security measures,” said Amkor’s Ahn.

For software, achieving compliance requires understanding your footprint and building a sustainable security approach. “When we deliver software to different factories, there’s sometimes a special version or a special requirement,” said Mike Kropp, president and CEO of PEER Group. “So we actually have different personalities of our software. We need to think about how we can keep compliance. Maybe in those million lines of code that are on a piece of equipment there’s something that shouldn’t be there.”

Kropp explained that the key is understanding your footprint and then building repeatable processes around it. That footprint includes the number of employees with access to software IP (200), the number of customer factories (120+) and the associated equipment (> 4,000). For PEER Group’s wafer handling software, he said the installed base has more than 90,000 connections. But understanding your footprint also means understanding the number of operating systems your software needs to support, which in PEER Group’s case is dozens, and identifying the third-party libraries your software relies upon, which is 130.

Monitoring security is an ongoing process, but it needs to be as automated as possible and built into the development process.

“We are delivering to the best of our knowledge secure software,” Kropp said. “If a vulnerability is detected in our own software, we’re going to treat it like a defect. We’re going to assign a work item with a severity level and put that on the content developer’s work list. If we do this at the end of the process, it’s too late. This has to happen as part of our development environment. We changed our way of doing business to meet security as a routine way of operation.”

Fig. 1: Example of a software vulnerability process. Source: PEER Group

Data sharing and security is always a concern. “In addition to physical security, cloud information security has become an issue in our path toward the autonomous smart factory, especially when we try to embrace generative AI,” said James Lin, deputy division director for smart manufacturing at UMC. “Training the state-of-the-art generative AI models requires sensitive enterprise data in a big GPU environment. If we want to leverage an enterprise cloud solution, the highest level of information security certification is an absolute must.”

Generative AI is a new threat to securing data because of its ability to intelligently link together bits of data rather than trying to grab all of it in one place. According to one report, engineers used ChatGPT technology to optimize test sequences to identify faults in chips, and in a separate incident, to convert meeting notes into a presentation. In both cases, sensitive information was shared outside the company. [1]

The cloud itself includes state-of-the-art security, but that’s not the whole picture. “Most fabs will say data security (cloud versus on-prem) is the biggest issue. I believe that cloud data security by the big providers (AWS/Azure etc.) is more secure than any on-prem environment today,” said David Park, vice president of marketing at Tignis. “The biggest issue is not outside hacking, but improper credentialing of users. If you inappropriately supply access to an employee, that is just as bad as allowing a hacker to breach your security. Internal security and permissions will be a big issue as smart manufacturing becomes the norm.”

Data in motion to and from the cloud, and data and software shared between different companies or offices, may be much less secure. And while encryption is the standard way of protecting such data, that doesn’t work across a complex supply chain because most companies block incoming encrypted data and software.

“Today in many ways we are not aligned with our business, particularly when it comes to our data,” observed Jason Callahan, vice president and chief information security officer at Lam Research. “We are operating from the zero-trust point of view. But we all share intellectual property. So obviously, there’s a lot of trust going on. We’ve been working with our suppliers and others to share information in an effective manner. From a network concept, we ran into the roadblock. Fundamentally, we as security people don’t trust encryption. I found that everybody was blocking encryption coming into their environment. If you’re a networking person, encryption can be bad. And fundamentally, this is our biggest weakness. We denied encryption, which is shocking to me because we’re the people that forced everybody to encrypt everything inside.”

There are three traditional concerns with encryption. First, it could contain malware or cause a breach, and there is no way of knowing that until it is decrypted. Second, it could conceal a mechanism for exfiltrating data. And third, it could hinder legal forensics or discovery in legal disputes.

Callahan disputed all of these concerns, noting that everyone has defense-in-depth as a cornerstone of their security program, including anti-virus software and endpoint detection and response (EDR) to detect malware and breaches. Data exfiltration is an insider risk issue, and companies have tools and systems in place to address it. Concerns related to legal forensics or discovery are a corner case. Allowing encryption on intellectual property to maintain safe transfer is far more important.

Supplier management for security
All the CISOs agreed that managing the security across the supply chain is absolutely necessary. However, this is easier said than done. The number of suppliers is huge, which makes this an immense challenge.

For a software supplier, this includes third-party libraries. For equipment suppliers, it’s component suppliers. And for factories, it’s manufacturing equipment, materials, software suppliers, and computer hardware. For example, Aernout Reijmer, CISO at ASML, said the company’s equipment consists of about 380,000 components provided by about 5,000 suppliers.

TSMC and ASML, among others, set up educational training for their suppliers. They also have set up alerts, which helps support smaller suppliers that often don’t have a large security group.

Standards
The NIST Cybersecurity framework [2] provides guidance for setting up organizations’ own practices. There also are several ISO standards (e.g., ISO 17001, 27110), but they focus on information security. In addition, these general standards do not readily apply to a complex factory setting in which external equipment is installed.

Fabs, in particular, include a combination of high-value targets, high complexity, along with a historical reluctance to update factory equipment. That combination makes fabs and foundries especially vulnerable to security issues, prompting SEMI members in Taiwan and North America to drive industry-specific standards related to equipment. Two SEMI tasks forces defined factory equipment security — E187 (Taiwan) and E188 (North America). Included in those standards:

SEMI E187: Cybersecurity for Fab Equipment

• A common, minimum set of security requirements for fab equipment, designed to be implemented by OEMs for fab equipment running Linux or Windows;
• Focus on network security, endpoint projection, and security monitoring.

SEMI E188: Malware Free Equipment Integration

• A framework to mitigate malware attacks during equipment installation and maintenance activities, based on well-defined reporting requirements;
• Requires malware scanning and system hardening, along with checks of incoming software and patches against known vulnerabilities.

“The two standards are complementary,” said Doug Suerich, director of marketing at PEER Group. “SEMI E187 is about ensuring that equipment is designed and configured to a baseline level of security and maintainability when it first appears at the factory. SEMI E188 goes deeper on a subset of courses from SEMI E187 — specifically, providing requirements around reducing the risk of introducing malware to the factory during equipment installation and follow-up field support. The standards teams will work on expanding even further on different SEMI E187 topics.”

These standards are being rolled out, and manufacturers are requiring it for newly installed equipment.

Assessments
Security assessments are used to understand a supplier’s security level. The results can be used to influence purchases and to identify improvements at suppliers. TSMC’s Tu pointed to his company’s process for scoring a supplier, which includes a third-party online assessment and a self-assessment of 135 questions covering the following areas:

• Certification and risk assessment;
• Inventory management and physical security;
• Cybersecurity incident detection and response;
• System development and application security;
• Network security and change management;
• Organization policy and human resources security;
• Computer operation and information management, and
• Identity and access management.

All major semiconductor manufacturers are performing as well as they need to and filling out assessments for their customers. But requiring that each company have its own assessment bogs down the whole industry. “We overload the industry with all kinds of security assessments,” said ASML’s Reijmer. “We haven’t got an idea what we already are rolling out within our supply chain. If we over-complicate it, if we over-engineer it, then we’re not going to get to work on solutions.”

Others agree. “I’ve got 15 people doing this full time, and they answered questions so I can sell my product,” said Brent Conran, Intel’s CISO. “What if I put that labor into actually doing cybersecurity? Isn’t that a better way? Everyone should consider that what was done in the last 20 years may not be sufficient because we’re so digital and because it’s moving so fast.”

Also, assessments are missing key attributes related to recovery and resilience. “There is no correlation between our efforts and the risk reduction,” said Kannan Perumal, CISO at Applied Materials. “We have a lot of things to help address this problem, but we are still struggling because we have so many suppliers and we can only do so much with available resources.”

Perumal pointed to the lack of standards for semiconductor supply chain cyber-risk assessment. As a result, every company has its own assessment performed by their supplier’s security team (if they have a dedicated team), which makes it a resource-intensive task. In addition, assessments don’t focus on all the things that matter, such as recovery and resilience.

Like the semiconductor industry, automotive also has a large set of suppliers to manage. Perumal examined how the two industries address security.  The comparison confirms what several CISO’s highlighted — the chip industry needs an efficient framework, common criteria, and a third-party certification group to manage the process.

Fig. 2: Supply chain cybersecurity risk management comparisons. Source: K. Perumal, Applied Materials

Calling for collaboration
For the semiconductor industry, protections beyond the corporate boundary are necessary because of the deep interdependencies. With a complex operation and many entry points for security issues, working together is required to make it effective and economical. As Intel’s Conran aptly said, “We can’t do this alone. It’s going to take all of us to come together to work through the supply chain and understand many of the things we have to do in order to keep this machine going.”

Moving forward on cybersecurity collaboration involves not only agreeing to standards and an industry accepted assessment process for suppliers. It also requires joining the expertise across the major semiconductor factories and equipment suppliers. By doing so, the industry can learn as fast as possible to address the common threats. To enable this level of collaboration, SEMI is forming the Cyber Security Consortium.

— Susan Rambo contributed to this story.

References

1. Samsung ChatGPT event https://www.businesstoday.in/technology/news/story/samsung-employees-accidentally-leaked-company-secrets-via-chatgpt-heres-what-happened-376375-2023-04-06
2. NIST Cyber Security Framework https://nist.gov/cyberframework

Russian forces launched a missile attack on the Chernihiv Music and Drama Theatre when a gathering of drone manufacturers and aerial reconnaissance training schools was held there as part of the Liuti Ptashky (Angry Birds) demo day, although only the event’s participants knew the exact location.

Source: Angry Birds demo day announcement; Mariia Berlinska, founder of the NGO Air Reconnaissance Support Centre and the author of the film Invisible Battalion; Valerii Borovyk, a serviceman from the Kulchytskyi Battalion of Ukraine’s National Guard

Details: Birds of Fury gathered in Chernihiv at 10:00 on Saturday.

At 11:30, an explosion rang out in Chernihiv.

A Russian missile hit the Taras Shevchenko Chernihiv Regional Academic Music and Drama Theatre, located on the central square.

National Guard serviceman Valerii Borovyk reported that the drama theatre’s second floor was actually destroyed.

Mariia Berlinska wrote that everyone who had taken shelter was safe, including her. However, some people went outside.

The co-organiser of the event later added: "No, this is not a commercial event, it's a closed meeting of engineers, military and volunteers on military technology for the battlefield."

Quote from Berlinska: "The event was officially agreed upon in advance with the local authorities, and they provided the venue.

The announcement of the event was available to the public. But the specific place was announced only (!) to registered and Tested participants a few hours before the event. All information about the participants has been provided to the relevant authorities.

We are currently cooperating with Ukraine’s Security Service and providing all the necessary information needed for an operational investigation."

Details: Kremlin-aligned news agency RIA Novosti also confirmed that the Russians had targeted the drone conference. Civilians sustained injuries during the attack.

Background: On the morning of 19 August, Russian troops hit the centre of Chernihiv with a ballistic missile. As of now, there is information about six people killed and 42 affected.

Ukrainska Pravda is the place where you will find the most up-to-date information about everything related to the war in Ukraine. Follow us on Twitter, support us, or become our patron!

© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

watch now

Investing more in AI

However, Alibaba said it saw "strong demand" in its cloud business for training artificial intelligence models and related services.

"We believe the growth opportunity driven by AI services have just begun. We believe the technology revolution built by AI not a short term opportunity but the beginning of a new era," management said in a conference call with analysts Thursday.

They highlighted plans to invest further in AI development and business opportunities.

"The Taobao app has the greatest potential to become a one stop smart portal for life and consumption enabled by AI," management said on the earnings call.

watch now

Alibaba restructure

watch now

Alibaba Group Holding Limited (NYSE:BABA) Q1 2024 Earnings Call Transcript August 10, 2023

Alibaba Group Holding Limited beats earnings expectations. Reported EPS is $2.4, expectations were $1.97.

Operator: Good day, ladies and gentlemen. Thank you for standing by. Welcome to Alibaba Group's June Quarter 2023 Results Conference Call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a Q&A session. I would now like to turn the call over to Rob Lin, Head of Investor Relations of Alibaba Group. Please go ahead.

Rob Lin: Thank you, and good day, everyone. Welcome to Alibaba's June Quarter 2023 Results Conference Call. With us today are Daniel Zhang, Chairman and CEO; Joe Tsai, Executive Vice Chairman; Toby Xu, Chief Financial Officer. We have also invited Trudy Dai, the CEO of Tabo and Tmall Group during the call. This call is also being webcasted from the IR section of our corporate website. A replay of the call will be available on our website later today. Let me quickly cover the safe harbor. Today's discussion may contain forward-looking statements including without limitation statements about the outlook of our businesses and our organization. Forward-looking statements involve inherent risks and uncertainties that may cause actual results to differ materially from our current expectations.

For detailed discussion of these risks and uncertainties, please refer to our latest annual report on Form 20-F and other documents filed with the U.S. SEC were announced on the website of Hong Kong Stock Exchange. Any forward-looking statements that we make on this call are based on assumptions as of today, and we do not undertake any obligation to update these statements except as required under applicable law. Please note that certain financial measures that we use on this call, such as adjusted EBITDA, adjusted EBITDA margin, adjusted EBITA, adjusted EBITA margin, non-GAAP net income, non-GAAP diluted earnings per share or ADS, and free cash flow are expected on a non-GAAP basis. Our GAAP results and reconciliations of GAAP to non-GAAP measure can be found in our earnings press release.

Story continues

Unless otherwise stated, growth rate of all stated metrics mentioned during this call refers to year-over-year growth versus the same quarter last year. With that, I will now turn to Daniel.

Daniel Zhang: Thanks, Rob. Hello, everyone. Thank you for joining our earnings call today. We started the fiscal year with a robust quarter. The latest macro data indicates some uncertainties in the pace of post-COVID recovery. But as economic and consumer activities continue to resume, our business has demonstrated encouraging trends, economics resilience, confidence in the consumption recovery and the significant potential from an integrated development of the digital economy and the real economy. The solid quarter also showed promising early results of our reorganization, which is beginning to unleash new energy across our businesses. Our revenue reached RMB234 billion, grew at 14% year-over-year and the growth was achieved across our different business segments.

Our adjusted EBITDA increased 32% year-over-year to RMB45.4 billion, showing progress in our continued focus on operating efficiency and the quality of operation. Next, our growth results of each of our major businesses. First, let me invite Trudy to share the Taobao and Tmall Group updates.

Trudy Dai: Greetings everybody. This is Trudy, and it's my pleasure to speak with you again. In the just concluded June quarter, under our putting users' first strategy, the Taobao app's user base has been put on a rapid track of growth. From April of this fiscal year, the average number of DAUs each month has grown by 6% or higher year-over-year. Last month, July, growth was over 7%. Based on third-party data, our DAU leadership in the e-commerce space continues to widen. More and more users are choosing to use the Taobao app. At the same time, our building a prosperous ecosystem and realizing technology-driven innovation strategies are also starting to yield results. Since we launched the value for money battle this fiscal year, we've seen a very clear trend of merchant growth on Taobao and Tmall.

In the June quarter, we on-boarded a large number of new merchants, a significant portion of whom quickly started contributing to that value for money battle, winning over and converting users. So our value for money battle will continue and will be an area of major investment. We need to supply users the experience of good merchandise is not expensive on Taobao and Tmall, and we need to guide merchants to enhance value for money in order to achieve business scale growth and long-term stable returns. In fact, we saw initial evidence of this in the June quarter. Merchant confidence in doing business on our platform increased significantly and merchant spending also grew with an increase of over 20% in the daily average number of merchants paying for advertising.

This all goes to show that more and more merchants are taking Taobao and Tmall as their first choice platform for stable operation of long-term business. As for realizing technology-driven innovation, we've already upgraded merchant tools with AI, enabling merchants to open stores, launch new products, operate their businesses and conduct marketing campaigns with much greater efficiency and helping to optimize store display and product descriptions, thereby significantly enhancing the shopping experience for users. As a result of these strategies, the Taobao and Tmall Group recorded close to RMB80 billion in CMR this quarter, a year-over-year increase of 10%. Within that, we saw very strong willingness to invest among merchants coming to Taobao and Tmall from other platforms.

As for the platform itself, continue to be committed to reducing costs and raising efficiency. We'll spend where it makes sense to, and we'll save where we can. As a result, despite our huge investments in users in the value for money battle and in AI, the Taobao and Tmall Group recorded a 9.1 year-on-year increase in adjusted EBITDA in the June quarter, slightly lower than CMR growth. Also during the just concluded 618 Taobao and Tmall Shopping Festival, we achieved a two-wheel drive effect of user scale and purchasing power. The data showed that within the two factors that drove GMV growth during 618, growth in number of paid orders and an average order size was remarkably similar. So that means that the contribution of each of those two factors was balanced.

On the one hand, the number of 88 VIP members and GMV both grew by double digits year-over-year. And on the other hand, as part of our value for money battle during this year's 618, we launched during the first time a Taobao Good Price Festival, marking the first time in the history of 618 that there was a dedicated promotion channel for Taobao merchants. This Tabou Good Price Festival proved effective in promoting value for money offerings and in attracting more users from lower-tier cities and young users to visit and also to make purchases. So if I were to sum up the June quarter in one sentence, I would say, our three strategies of putting users first, building a prosperous ecosystem and realizing technology-driven innovation are starting to yield results.

Throughout the remainder of the fiscal year, we will continue to implement these three key strategies. Specifically, first, we will do our utmost to meet the needs of diverse groups of Chinese consumers and to satisfy their demands around shopping, around consumption, and also around daily life. To do that, we will continue to invest heavily in developing content around shopping, consumption and daily life. Second, we will also continue to invest heavily in the value for money battle in two different ways. On the one hand, we will continue in line with our mission to support small and medium merchants with targeted programs such as those for merchants in industrial clusters and for new SME merchants. And in parallel, we will build a more advanced open and inclusive merchant ecosystem and attract more merchants to engage in the value for money battle so as to create a virtuous cycle on Taobao and Tmall of merchant ecosystem, revenue growth, stronger profitability, and that is precisely what our mission has always been.

Third, we'll continue to invest in AI. It is our conviction that technology creates commercial value. Taobao and Tmall have the largest collection of merchants and of merchandise on the Internet and are the most fertile soil anywhere on the Internet to explore AI applications. Hence, in this technological revolution, the Taobao app has the greatest potential to become a one-stop smart portal for life and consumption enabled by AI, satisfying the broadest variety of diverse needs across our huge base of 1 billion users. At Alibaba, we often say, seeing is believing. I'm confident as CEO that over this three-year management cycle, with the execution of these three key strategies, the Taobao and Tmall Group will create a virtuous investment cycle from investment in users and user growth leading to merchant growth, leading to transaction growth, further leading to revenue and profit growth and feeding back into further investment in users and user growth.

Along the way, though, there will likely be occasional months with volatility or setbacks in our operations. Under the leadership of the Taobao and Tmall Group's Board of Directors and management team, we will remain firmly committed to our three key strategies to continuing to invest in users, providing strong support for merchants and upgrading our platform with technology for the long term, and we're fully confident in the results we will achieve for the long term. Thank you very much.

Christopher Penler / Shutterstock.com

Daniel Zhang: Now I will share the updates on our other major businesses. Alibaba International Digital Commerce Group, AIDC, delivered 41% overall revenue growth this quarter, and its retail business achieved 60% revenue growth year-over-year. This was driven by solid order growth of our international retail parking places at around 25% year-over-year growth. Advertising revenue growth because of the enhancement of our monetization and higher direct sales revenue contribution as AliExpress expands its new choice model. Alibaba also delivered a record order growth based on its defeated country strategy, accelerating progress in high-priority markets such as Philippines and Thailand. In Turkey, Trendyol continued to maintain its growth momentum and market leadership.

We are starting to see economics of scale in our international retail businesses as enhancing monetization and operating efficiency reduced adjusted EBITDA loss. AIDC's adjusted EBITDA loss decreased by 17% year-over-year during the quarter. Looking ahead, we will continue to expand the trust model, leverage the capabilities of an integrated cross-border supply chain and enhanced consumer experience with higher certainty in logistics and service level. This plan is to expand the tourist model from Anixter to certain of our other retail platforms with upgrading our product and services, especially in providing a better localized experience. During the quarter, revenue from local service group grew 30% year-over-year, driven by strong combined order growth across both Orama and Amap.

Amap daily active users and two destination services expanded due to the strong recovery in community and travel demand after the panic measures were lifted. With a long-term strategic focus on technology leadership, Amap released new product features such as traffic light comedown and a tunnel navigation during the quarter, which were well received by its users. Its market share in map navigation services continue to expand. During the quarter, Orama focused on investing in its own service capability enhancement and a more inclusive partnership strategy, which helped sustain healthy order growth while maintaining positive unit economics. Taobao's revenue during the quarter grew 34% year-over-year, primarily driven by the volume increase of international fulfillment solutions services, meaning survey AliExpress and the China domestic consumer logistics services.

China's adjusted EBITDA of the quarter was RMB877 million due to the continued focus on quality of operation and lower transportation costs as international air cargo price came down. Looking ahead, China will continue to invest and build logistic network for cross-border and domestic parcels and leveraging Alibaba's multiple digital commerce use cases to expect its network effect. Tania will also share part of its savings from this operating efficiency improvement and the transportation cost reduction with its customers through price strategy adjustments and pursue higher economics of scale on a larger revenue base. During the quarter, Alibaba Cloud revenue grew 4% year-over-year. The growth rate was negatively impacted by the normalization of CDN demand as usage of video streaming, remote working and remote learning paying down when offline activities resumed after a measures were lifted.

The growth rate was also partially impacted by revenue decline from a top customer. In the past quarter, we have received strong demand for model training and related AI services on cloud infrastructure, which were only partially fulfilled due to the near-term supply chain constraints globally. We believe the growth opportunity driven by AI services have just begun. We believe that technology evolution both by AI is not a short-term opportunity at the beginning of a new era as one of the world's leading cloud service provider. We will continue to invest in forming a full spec product and technology leadership across us, post and mask layer. This is key for us in capturing AI opportunity and set 18 advantage for AliCloud versus other players in China, which mainly focused on one of the layers.

We will leverage and expand this advantage when serving the needs of our customers including training and service needs for large language start-ups as well as industry demand for customized models and vertical models. We believe the high performance and the low-cost computing power required for model training and services will open up brand-new opportunities for cloud computing services. Over the long term, Alibaba Cloud will benefit from application of AI in all industries. In the last layer, we have built model scope a leading open source online community in China for models and the related tools and services, which is very popular among developers. The community hosted over 1,000 AI models, including Meta's recently released Lama 2 and our own open source model.

The 7 billion parameter version of Tongyi Qianwen, we believe the aggregation and engagement of a model ecosystem will significantly help developers optimize their model and use services on Alibaba Cloud. Since April we; released our own large language model, Tongyi Qianwen audio to test, transcription platform Tongyi Qianwen, and test to image model Tongyi Wanxiang, which together have accumulated millions of users. In this quarter, Alibaba Cloud's adjusted EBITDA reached RMB387 million, representing year-over-year growth of 106%. This is mainly due to the reduced co-location and bandwidth costs of into as a result of normalized usage after the pandemic as well as enhanced product mix and efficiency improvement, for example, server utilization in our cloud business.

We will continue to focus on quality of operation. And as we continue to scale up, we will work to achieve economics of scale that will deliver long-term operating benefits and contribute to our profitability. Our digital media entertainment business group delivered 36% revenue growth year-over-year and the first ever quarter of profitability. This was a result of the following factors. Number one, decreased growth in subscription revenue; number two, higher revenue contribution from [indiscernible], which both benefited from the recovery of off-line shows and cinemas after the pandemic. Number three, Alibaba Pictures launched of several blockbusters and the robust China box-office demand during the quarter. Going forward, we will continue to Excellerate our content production capabilities and enhance DME's business operating results through high-quality content creation and distribution.

In July, we published our fiscal year 2023 ESG report. Over the past year, we have made progress across the seven strategic mentions of social responsibilities, especially in restoring our green climate. We achieved solid ambition reduction under Scope 1, 2 and 3. We drove a mission reduction across our business ecosystem which was roughly equivalent to the total annual greenhouse gas emissions of 1 million average household in China. Leveraging our unique position, connecting consumers and merchants our product innovation, Carbon 88 Legend platform enables our customers and merchants to join the carbon saving efforts across our ecosystem. Following the announcement of our 1+6+N reorganization in March, the six business groups have started operating in a new way under the leadership of their respective Boards.

The past quarter's solid performance was also a reflection of early results of this change and further enhanced our confidence towards the future. As part of the new governance framework, we are also further strengthened the Company's capital management. Moving ahead with our various programs to Excellerate shareholder return under the leadership of the newly established capital management committee, the capital market projects we announced last quarter are all underway, and we have also been continuing sharing -- continuing share repurchase activities in the market. We will update you -- we will keep you updated on the progress in the future. Lastly, this will be the 36th earnings call I have participated since our IPO in 2014 and the final one as Chairman and CEO of Alibaba Group.

This truly has been a privilege of a lifetime to lead the Company by CEO on our three strategies of consumption, cloud computing and globalization since 2015 and be a part of Alibaba's high growth period. As Chairman, it was an extraordinarily experience to take on the challenges brought on biopic an unprecedented change in the macro environment over the past four years. This has been an incredible invaluable life experience I sincerely thank our shareholders and analysts for your trust and support over the years. This quarter is combination of my year leadership of Alibaba and the start of my new journey. I hope you continue to support Joe and Eddy and the new management team. As Cloud Intelligence Group moved towards becoming a public company, I look forward to reengaging with everyone in my new role in the journey ahead.

Thank you, everyone. Now I will pass to Toby to go through the financial updates.

Toby Xu: Thank you, Daniel. Due to the strong business momentum and our focus operating efficiency across businesses, we achieved a robust financial performance in the past quarter. Total consolidated revenue was RMB234.2 billion, an increase of 14%. Consolidated adjusted EBITDA increased by RMB11 billion or 32% to RMB45.4 billion in the quarter due to improvements across all business segments. Non-GAAP diluted earnings per share was RMB2.17, an increase of 48%. Additionally, during the quarter, we repurchased $3.1 billion worth of our shares, which accounted for 1.4% of total shares outstanding. This is supported by our continuous generation of strong free cash flow. During the quarter, free cash flow was RMB39.1 billion or $5.4 billion, an increase of 76% year-over-year.

Our strong free cash flow and balance sheet continue to put us in excellent position to strengthen our competitiveness and capture new opportunities. Now let's look at the cost trends as a percentage of revenue, excluding SBC. Cost of revenue ratio, excluding SBC, decreased 1 percentage point to 61% during this quarter. Product development expense ratio decreased 1 percentage point to 4% during this quarter. Sales and marketing expense ratio remained stable at 12% in this quarter, and general administrative expenses ratio remained stable at 4% in this quarter. Our net income was RMB33 billion, an increase of RMB12.7 billion compared to the same quarter last year. The increase was primarily attributable to the increase in income from operations and the increase in share of results of equity method investees partly offset the net losses arising from the decrease in market prices of our equity investments in publicly traded companies compared to net gains from these investments in the same quarter last year.

As of June 30, 2023, we continue to maintain a strong net cash position of RMB419.2 billion or $57.8 billion. Free cash flow this quarter was RMB39.1 billion, an increase of 76%. The increase reflected an improvement on profitability and a decrease in capital expenditure. Now let's look at the segment results. Starting this quarter, we have implemented a new organizational and governance structure under which we now have six major business groups and various other businesses. Accordingly, our segment reporting has been updated to reflect our reorganization under our updated segment reporting second, revenue and adjusted EBITDA are presented before consolidation adjustments. We have also provided revenue and adjusted EBITDA trend of each business groups for the last five consecutive quarters in the appendix of the earnings presentation for easy reference.

Now let's look at the Taobao and Tmall Group. The user first strategy of Taobao Tmall Group is yielding positive user growth momentum and improving user retention on Taobao APP, which we have supported strong revenue growth and successful June 18 shopping festival during the quarter. Revenue for Taobao and Tmall Group was RMB115 billion, an increase of 12%. Customer management revenue increased by 10% to RMB79.7 billion, primarily due to increase in number of paying merchants, increasing merchants' willingness to invest in advertising our platform and increase in online physical GMV, excluding unpaid orders. Direct sales and others revenue increased 21% to RMB30.2 billion, primarily due to strong sales driven by the consumer electronics category.

Taobao and Tmall Group adjusted EBITDA increased by 9% to RMB49.3 billion. The increase was primarily due to the increase in profit from customer management service and the narrowing losses in certain businesses which was partially offered by Taobao Tmall Group's investments in growing TaobaoAPP users that has resulted in increasing DAU of 6.5%. Alibaba International Digital Commerce Group revenue was RMB22.1 billion, an increase of 41%. Revenue from international commerce retail business increased by 60% to RMB17.1 billion, the increase was primarily due to solid performance of all major retail platforms and improvements in monetization. Revenue from our international commerce wholesale business remained stable at RMB5 billion compared to the same quarter last year.

AIDC's adjusted EBITDA loss narrowed by RMB960 million to a loss of RMB420 million in June quarter. Loss is significantly narrowed year-over-year primarily because of improved margins of Trendyol and Lazada, partly offset by the increase in investments in new businesses such as Mirabel and Ali Express choice. Trendyol continued to deliver strong order growth in both of its e-commerce and the local consumer service businesses through robust revenue growth and continuing improvement in operating efficiency. For the first time, Trendyol achieved positive operating results during the quarter. The reduced loss from Lazada is primarily due to improvement in monetization. Local services group revenue in June quarter grew 30% to RMB14.5 billion, primarily due to robust GMV growth of Irma and the rapid order growth of Amap.

Local service Group adjusted EBITDA was a loss of RMB2 billion this quarter compared to a loss of RMB2.8 billion in the same quarter last year, reflecting the continued narrowing of losses driven by Irma's order growth and the positive unit economics per order as well as rapid order growth of Amap driven by market demand. Total revenue from China grew 34% to RMB23.2 billion, primarily contributed by the increase in revenue from international fulfillment solution services and domestic consumer logistics services. China adjusted EBITDA was a profit of RMB877 million compared to a loss of RMB185 million in the same quarter last year. Profitability turned positive year-over-year primarily because of improved operating results from international fulfilling solution services and domestic consumer logistics services.

Revenue from Cloud Intelligence Group was RMB25.1 billion in June quarter, an increase of 4%. The revenue growth was mainly driven by Alibaba consolidated businesses and the customers within financial services, education, electric power and automobile industries partly offset by our proactive efforts to manage revenue from project-based cloud services. Cloud adjusted EBITDA was increased by 106% to RMB387 million, primarily due to reduced co-location and bandwidth cost of DingTalk as a result of normalization of usage as compared to the same quarter last year. Revenue from our DME Group was RMB5.4 billion, an increase of 36% on primarily driven by growth of online entertainment business as well as a strong recovery of off-line entertainment business.

Adjusted EBITDA recorded a profit of RMB63 million compared to a loss of RMB907 million. The improved adjusted EBITDA was mainly due to the increase in revenue from Alibaba Pictures in Damai. Revenue from all other segments increased slightly by 1% to RMB45.5 billion, primarily due to the revenue growth contributed by Alibaba Health, Fliggy, Flushable and Intelligent Information Platform, partly offset by the decrease in revenue from Sun Art due to decrease in ticket size resulted from the decrease in customer stockpiling behavior compared to the same quarter last year. Adjusted EBITDA from all other segment was a loss of RMB1.2 billion compared to a loss of RMB2.3 billion in the same quarter last year, primarily due to improved operating results from Freshippo, Lingxi Games and Fliki.

Thank you. And that's the end of our prepared remarks. We can open up for Q&A.

Rob Lin: On today's call, you are welcome to ask questions in Chinese or English. A third-party translator will provide consecutive interpretation for the Q&A session. Please note that the translation is for convenience purpose only. In the case of any discrepancy, our management statement in the original language will prevail. If you are unable to hear the Chinese translation, bilingual transcript of this call will be available on our website within one week after meeting. Operator, please connect the speaker in SI conference line now. Please start the Q&A session already. Thank you.

See also 25 Countries with the Best Quality of Life and 10 Cloud Computing Stocks to Watch.

To continue studying the Q&A session, please click here.