Chinese tech stocks experienced a significant surge, propelling a key index to its highest level in nearly four years. This rally is attributed to increased investment in artificial intelligence and a regulatory decision impacting Nvidia. The ban on Nvidia's chip sales in China is expected to benefit domestic chip manufacturers, boosting their market prospects as local companies seek alternatives. This confluence of factors has created a positive environment for Chinese tech companies, driving investor interest and market growth. The Cyberspace Administration of China (CAC) has reportedly instructed major internet companies to cease purchasing Nvidia's AI chips, including the RTX Pro 6000D model specifically designed for the Chinese market, and to cancel any pending orders.
The move underscores China's broader strategy to reduce reliance on U.S. technology and foster self-sufficiency in semiconductor production. Chinese regulators have assessed that domestic AI processors now rival Nvidia's offerings in performance, further supporting the shift towards local suppliers. Companies like Semiconductor Manufacturing International Corp (SMIC) and Hua Hong Semiconductor have seen their stock prices jump, reflecting increased investor confidence in their ability to meet domestic demand. Baidu has also begun utilising its internally developed Kunlun P800 chip to train its AI models.
Nvidia's stock experienced a decline following the news, reflecting concerns about the company's future revenue prospects in the Chinese market. CEO Jensen Huang expressed disappointment but affirmed the company's commitment to supporting the Chinese government and companies. Some analysts suggest the ban could be a negotiating tactic in ongoing trade discussions between the U.S. and China.
