Alibaba shares plunge as US chip regulations scupper cloud spinoff

The news: Shares in Alibaba have slumped after the China ecommerce giant abandoned plans to spin-off its cloud unit amid US export restrictions on advanced computer chips.

The numbers: Alibaba shares were down 9.8% to HKD$73.35 on Friday, after it announced the cancelled spinoff in a quarterly update that boasted a 9% increase in YoY revenue to USD30.8 billion ($47.6 billion) and a swing to a USD3.8 billion net profit from a loss a year ago. The Hangzhou-based company announced a first-ever USD2.5 billion dividend payout, but it wasn't enough to keep many shareholders who were awaiting the spinoff from selling.

The context: The shift in tack has cast doubts over Alibaba's transformational plan to break-off its six main units for future public listings, Bloomberg reports. The US recently brought-forward export bans to China on powerful AI chips over concerns for military use, but the bans are already having an affect on China's retail sector.