Alibaba's stock plummets over US-China chip war

November 17, 2023 (MLN): Chinese e-commerce titan Alibaba's scrip tanked by over 7% on Friday after the firm's surprise decision to call off part of its high-profile restructuring because of the US-China chip war, as APP reported.

In a move that shocked investors, the Hangzhou-based tech giant said Thursday that US curbs on exports of advanced chips had forced it to call off the spinoff of its cloud computing arm.

The firm's stock dived 7.13% soon after the starting bell in Hong Kong, tracking a collapse in its New York-listed shares.

Washington has moved to bar the shipment to China of powerful chips, including those from California-based Nvidia, which are crucial to the development of artificial intelligence, on national security grounds.

In one of its most wide-ranging restructurings, Alibaba said in March it planned to split the vast group into six distinct entities that could pursue funding through public listings separately.

But on Thursday, it called off the creation of its Cloud Intelligence arm in light of "the recent expansion of US restrictions on the export of advanced computing chips".

"We believe that a full spin-off of Cloud Intelligence Group may not achieve the intended effect of shareholder value enhancement," the company said in its earnings release.

"Accordingly, we have decided to not proceed with a full spin-off, and instead, we will focus on developing a sustainable growth model for Cloud Intelligence Group under the fluid circumstances," Alibaba said.

Alibaba is a key player in China's expansive digital economy and the operator of a major online shopping platform.

Copyright Mettis Link News