China chipmaking stocks tumble as Beijing reportedly mulls allowing Nvidia sales

Chinese chipmaking stocks experienced a significant drop on Monday as reports emerged that Beijing was contemplating allowing certain local firms to purchase NVIDIA's advanced chips. According to The Information, China's Ministry of Industry and Information Technology had reached out to domestic companies like Alibaba and ByteDance, requesting information on the number of Nvidia RTX Pro 5500 units they intended to acquire and their intended applications. This inquiry suggested a potential approval of the sales, The Information reported.

Semiconductor Manufacturing International Corp, China's largest chipmaker by volume (HK:0981), saw a considerable decline of 3.7%, while Hua Hong Semiconductor Ltd (HK:1347) witnessed a near 5% drop. Moore Threads Technology Co Ltd, often considered China's answer to Nvidia (SS:688795), plummeted 6.3%, and Cambricon Technologies Corp Ltd (SS:688256) plummeted 5.7%.

Additionally, chipmaking equipment manufacturer NAURA Technology Group Co Ltd (SZ:002371) experienced a 3.4% decline, while memory chip leader CXMT Corp (SS:688825) dropped nearly 4%. These chipmakers trailed broader gains in both Chinese and Hong Kong markets.

The RTX Pro 5500, a Blackwell-generation professional workstation GPU released by Nvidia earlier this month, is capable of heavy AI computing tasks but remains outside the AI accelerator category of chips the U.S. has largely blocked from being sold to China. The report from The Information follows the recent U.S.-China summit, during which both nations agreed to improve trade relations, including a $30 billion exemption on tariffs in both directions.

This approval of Nvidia chip sales presents heightened competition for Chinese chipmakers, who are working to produce processors that can rival the advanced technology found in the U.S. and Taiwan. Several major and upcoming players in China, including CXMT and Moore Threads, recently saw successful stock market debuts, showcasing their determination to develop more homegrown AI chips amidst a backdrop of regulatory challenges.