Alibaba scraps cloud business spin-off citing US chip curbs
Alibaba Group has scrapped plans to spin-off its cloud business, citing uncertainties created by US export curbs on chips used in artificial intelligence applications.
The U.S.
decision last month to ban the export to China of more chips used in artificial intelligence (AI) has created major uncertainties for the country's big tech companies.
Tencent Holdings said on Wednesday it saw the curbs impacting its cloud services.
Thursday's announcement came alongside in-line second-quarter revenue from the Chinese e-commerce group, which in March had unveiled plans to carve out the cloud business as part of the biggest restructuring in its 24-year history.
The company also put on hold plans for an initial public offering of its Freshippo groceries business but said it would prepare external fundraising for its international digital commerce group arm.
Alibaba's logistics division, Cainiao applied to list in Hong Kong in September.
Alibaba's U.S.-listed shares were down 8.4% in premarket trading.
«The market does not like surprises,» Thomas Hayes, chairman at hedge fund Great Hill Capital said on the X social media platform.
«Investors had hoped to receive separate shares of the cloud business in hopes the segment could achieve a higher multiple in the public markets due to its growth potential.»
Analysts had in March estimated the cloud division could be worth between $41-60 billion but had warned that its listing could attract scrutiny from both Chinese and overseas regulators due to the reams of data it manages.
In September, Alibaba's former group CEO Daniel Zhang abruptly quit just two months after concentrating his focus on cloud computing.
The company then appointed Eddie Wu, one of Alibaba Group's co-founders
