Joe Biden Blocks China, Alibaba Business Shaken Tech – 1 hour ago

Jakarta, CNBC Indonesia – The Joe Biden administration’s policy of blocking chip exports to China has shaken Alibaba’s business.

The Chinese giant abandoned plans to spin-off its cloud business, following industry uncertainty following the blocking of chips from the United States (US).

“Alibaba will not undertake a full spin-off of its Cloud Intelligence Group business due to the uncertainty created by the US export ban on access to advanced computing chips,” said Alibaba director Joseph Tsai, quoted from ReutersFriday (17/11/2023).

The cancellation was announced alongside the company’s quarterly report. Alibaba’s US-listed shares were observed to fall 8.5% when the market opened.

“The market doesn’t like surprises like this,” said Great Hill Capital investment management director, Thomas Hayes, on his personal X account.

“Investors had hoped to receive separate shares of the cloud business, with the hope that this segment could achieve higher profits in the public market due to its large growth potential,” he explained.

Last March, analysts predicted Alibaba’s cloud division could be worth between US$ 41-60 billion. However, analysts also cautioned that the separation of the cloud unit could trigger pressure from Chinese and foreign regulators as the data business comes under scrutiny.

This week, Tencent Holdings also said chip restrictions from the US were impacting its cloud services. The chip technology that the US banned has been used by Chinese giants to develop artificial intelligence (AI) technology.

Last March, Alibaba announced plans to develop its cloud business separately as a stand-alone unit. This is part of the largest restructuring in the company’s 24 years of existence.

Last September, former Alibaba Group CEO Daniel Zhang suddenly resigned after two months of focusing on managing the cloud computing business.

The company then appointed Eddie Wu, Alibaba co-founder and Jack Ma’s confidant, as CEO of Alibaba and its cloud business. Zhang also appointed Josep Tsai, co-founder of Alibaba, as director.

Apart from that, Alibaba also postponed IPO plans for its food ingredients business unit called ‘Freshippo’.

As compensation for the delay, Alibaba said it was preparing to raise external funds from entrepreneurs and business entities.

[Gambas:Video CNBC]

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