Chinese tech stocks slide after Alibaba flags impact of US chip curbs
Investing.com-- Chinese technology stocks plummeted on Friday, with Alibaba Group (HK:9988) (NYSE:BABA) leading losses after the e-commerce giant shelved a planned IPO for its cloud unit, citing the impact of U.S. curbs on chip exports to China.
Alibaba’s Hong Kong shares slid 8.9% to a one-year low of HK$74.20, and were by far the worst performer on the Hang Seng index, which fell 1.6%.
The firm’s peers Baidu Inc (HK:9888) (NASDAQ:BIDU) and Tencent Holdings Ltd (HK:0700)- which together make the BAT trio, fell 3.5% and 1.8%, respectively.
Alibaba said on Thursday that it was no longer proceeding with a planned demerger of its cloud business, citing uncertainty over the supply of chips which are crucial to the development of artificial intelligence.
The move comes after the U.S. recently increased the scope of its chip export restrictions on China, amid worsening trade relations between the world’s largest economies.
China had retaliated by curbing the export of key materials used in battery making and electronics.
Alibaba is developing its own in-house generative AI, with the cloud unit at the heart of this venture. But a lack of access to the latest chips, particularly from NVIDIA Corporation (NASDAQ:NVDA), could severely dent progress.
Nvidia recently unveiled a new flagship graphical processing unit- the H200- for AI use.
U.S. export restrictions put Baidu and Tencent on the same boat. Earlier this week, Tencent warned that the curbs were likely to impact its cloud business, and that it had stockpiled Nvidia chips but was seeking Chinese alternatives.
A boom in AI interest saw several major tech players racing to develop their own offerings, especially with the popularity of OpenAI’s ChatGPT. But without the
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