In a surprising U-turn, Chinese e-commerce giant Alibaba has revealed it will no longer go ahead with a plan to split its cloud service unit from the main business and take it public. 

The announcement resulted in the company's shares dropping 10 per cent, removing $20bn (£16bn) from Alibaba’s market value.

Alibaba said the decision was a result of the restrictions imposed by US curbs on Chinese exports of semiconductor technology used in artificial intelligence (AI) applications, which the company said could make it harder to upgrade its existing hardware.

“We believe that these new restrictions may materially and adversely affect Cloud Intelligence Group’s ability to offer products and services and to perform under existing contracts, thereby negatively affecting our results of operations and financial condition,” Alibaba said. 

“Accordingly, we have decided to not proceed with a full spin-off, and instead we will focus on developing a sustainable...