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Alibaba Scraps Cloud Unit Spinoff, Citing Washington’s Chip Curbs

Livemint · 1y

Alibaba has abandoned its plans to spin off and list its cloud computing division due to the impact of Washington's export controls on high-performance chips to China. The restrictions have the potential to significantly hinder the cloud business's ability to offer products and services and fulfill existing contracts. Additionally, Alibaba has put the initial public offering of its grocery arm, Freshippo, on hold due to weak market conditions. Falling stock prices, China's economic struggles, and geopolitical tensions have deterred foreign investors from Chinese IPOs. The US chip curbs are a result of concerns about advanced chips being used for cyber warfare, espionage, and military development, but they also play a crucial role in training AI models and operating data centers. Tencent Holdings has also expressed concerns that the restrictions will affect its business leasing AI chips through cloud services. The US sanctions are prompting Chinese tech companies to accelerate their research and develop cutting-edge AI without relying on American chips.