--- title: "Alibaba is taking U-turn on Cloud-based unit know Why?" description: "Alibaba's Hong Kong shares plunged 10% after it canceled plans to spin off its cloud business, citing U.S. export curbs on semiconductors used in AI a" author: "Saumya Mishra" published: 2023-11-18 updated: 2023-11-18 canonical: https://www.mindstick.com/news/3550/alibaba-is-taking-u-turn-on-cloud-based-unit-know-why category: "technology" tags: ["cloud computing"] reading_time: 3 minutes --- # Alibaba is taking U-turn on Cloud-based unit know Why? - [**Alibaba's**](https://yourviews.mindstick.com/view/85021/success-story-of-jack-ma-alibaba-founder) **Hong Kong shares plunged 10% after it canceled plans to spin off its cloud business, citing U.S. export curbs on semiconductors used in** [**AI**](https://www.mindstick.com/services/artificial-intelligence) **applications.** - **The drop, potentially Alibaba's biggest one-day fall in over a year, wiped about $20 billion off the company's market value.** - **Alibaba will now focus on growing its cloud business and providing investment for its AI drivers.**\ - **Alibaba's Response to U.S. Export Curbs and Strategic Adjustments**\ In response to U.S. export curbs on semiconductor components crucial for [AI applications](https://www.mindstick.com/forum/161494/how-is-natural-language-processing-nlp-used-in-ai-applications), Alibaba Group witnessed a sharp decline in its [Hong Kong](https://yourviews.mindstick.com/view/81243/hong-kong-2020-movement-against-china) shares, marking potential repercussions for the Chinese [tech](https://www.mindstick.com/services/technologies) industry. The cancellation of the full spin-off of **AliCloud**, the company's cloud business, was unveiled as a strategic response to the uncertainties introduced by the **U.S. restrictions.**\ - **Market Impact:** A **$20 Billion** HitThe 10% drop in Alibaba's Hong Kong shares translated into a staggering $20 billion reduction in the company's market value, representing its most significant one-day fall in over a year. This market reaction underscored the [potential challenges](https://www.mindstick.com/forum/158480/what-are-the-potential-challenges-or-drawbacks-of-using-server-side-caching) and [risks associated](https://www.mindstick.com/forum/158341/what-are-some-security-risks-associated-with-javascript-and-how-can-they-be-mitigated) with the abrupt change in strategy.\ - **U.S. Export Curbs and Industry Concerns:** Alibaba's decision to abandon the cloud business spin-off highlighted the broader [challenges faced](https://www.mindstick.com/forum/158058/what-are-the-challenges-faced-by-scientists-and-engineers-when-they-design-nanoscale-devices) by Chinese tech companies amid U.S. export curbs. Similar concerns had been raised earlier in the week by **Tencent Holdings**, emphasizing the growing difficulty in securing essential chip supplies from U.S. companies.\ - **[Strategic Focus](https://answers.mindstick.com/qa/114938/is-nato-s-strategic-focus-shifting-significantly-towards-countering-threats-beyond-russia) on AI and Cloud:** Chairman **Joseph Tsai**, addressing the post-earnings call, emphasized Alibaba's commitment to growing the cloud business and investing in AI drivers. The company acknowledged the potential long-term impact of the chip ban on its ability to offer [products and services](https://answers.mindstick.com/qa/99754/how-can-online-reviews-help-you-make-better-decisions-about-products-and-services), reinforcing the importance of retaining the cloud unit.\ - **Financial Outlook and Business Restructuring:** Despite the market turbulence, Alibaba reported second-quarter revenue in line with analysts' expectations. The company revealed a strategic review to distinguish between "core" and "non-core" businesses, emphasizing a more independent market approach for each business unit. Additionally, plans for the listing of Alibaba's logistics arm, **Cainiao**, and external fundraising for its international digital commerce unit were outlined. ![Alibaba is taking U-turn on Cloud-based unit know Why?](https://www.mindstick.com/usernews/655071/34d98d0a-553f-42ce-aa51-ef99eb43af80/images/784f5009-4640-409f-86c0-18419f73c66c.jpg) \ Alibaba's strategic adjustments reflect the complex landscape for Chinese tech companies, with geopolitical challenges influencing crucial business decisions. The company's focus on AI and cloud, amidst external pressures, underscores its commitment to navigating the evolving dynamics of the tech industry. --- Original Source: https://www.mindstick.com/news/3550/alibaba-is-taking-u-turn-on-cloud-based-unit-know-why Copyright © MindStick Software Pvt. Ltd. This Markdown version is provided for developers, AI systems, and offline reading.