Alibaba, the massive Chinese e-commerce company, saw a sharp decline in its U.S.-listed shares on Thursday when it revealed that it would not be proceeding with the full spin-off of its cloud group because of restrictions on U.S. chip exports.
After hearing the news, the company’s stock fell slightly over 8% in pre-market trading at 7.40 a.m. ET, but it was still above its previous lows.
Alibaba announced on Thursday that it will no longer be moving forward with a spin-off of its Cloud Intelligence Group, which is Alibaba’s cloud computing division and a rival to Microsoft Azure and Amazon Web Services. Alibaba intended to have the division publicly listed.
Restrictions on U.S. semiconductor exports, according to Alibaba, have made it more difficult for Chinese enterprises to obtain vital chip supply from American businesses. October saw the U.S. ban sales of Nvidia’s cutting-edge chips, the H800 and A800, which are aimed at artificial intelligence.
Alibaba stated on Thursday that the limitations had led to “uncertainties regarding the future prospects of Cloud Intelligence Group.”
The firm stated that it will instead concentrate on creating a sustainable development model for the unit “under the fluid conditions” and that it “believes that a full spin-off of Cloud Intelligence Group may not deliver the intended effect of shareholder value enhancement.”
Alibaba’s plan to reorganise into six distinct business units, one of the most significant shake-ups in the company’s history, has encountered a roadblock with the decision to rescind its cloud unit spinout.
Source (CNBC)
