Chinese tech corporation Alibaba has seen its stock sink by 10 percent following US semiconductor chip restrictions, a crucial component of its cloud computing division.

It announced on Thursday, Nov. 16 that it was cancelling its plan to launch its Cloud Intelligence Group as a standalone company, citing the recent US export restrictions.

“The recent expansion of U.S. restrictions on export of advanced computing chips has created uncertainties for the prospects of Cloud Intelligence Group. We believe that a full spin-off of Cloud Intelligence Group may not achieve the intended effect of shareholder value enhancement,” Alibaba said in a statement.

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“We have decided to not proceed with a full spinoff, and instead we will focus on developing a sustainable growth model for Cloud Intelligence Group given the fluid circumstances,” it added.

Following the announcement, Alibaba shares declined 9.14 percent in New York and more than 10 percent in morning trading on Friday in Hong Kong.

In October, the US Department of Commerce announced it was adding significant restrictions on the exporting of artificial intelligence chips and other advanced semiconductors to make it harder for American companies Nvidia and Intel to sell to China. The new law also made it harder to introduce new chips and get around the restrictions by closing loopholes in export controls from last year.

Commerce Secretary Gina Raimondo said the goal is to block China’s “access to advanced semiconductors that could fuel breakthroughs in artificial intelligence and sophisticated computers.” She emphasized that the restrictions were not designed to cripple China economically but rather to prevent use of the chips by the country’s military.

These moves have already hurt Chinese commercial activities. Hardware computer tech company Nvidia will have to cancel $5 billion worth of advanced chips with AI capabilities scheduled to be sold to China, or find other buyers. At the time, it was also reported that TikTok parent company ByteDance, cloud company Baidu, and, sure enough, Alibaba, were also affected.

On Thursday, Nov. 16, Alibaba stock fell again following the sale of $870 million worth of shares by the family trust of Jack Ma, the Chinese billionaire that co-founded the company.

When asked, Ma insisted that he is “very positive” about the company and its future and will continue to hold his own shares. The sale from his family trust, scheduled for Nov. 21, is part of a long-standing “preset conditional plan to do a partial sell-down for the future” decided upon in August, according to his office.

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