China chip stocks rally on self-reliance bets, Nvidia scrutiny

Investing.com-- Chinese technology stocks, especially chipmakers, rose sharply on Monday as Beijing’s scrutiny of Nvidia chips sparked increasing bets on locally-sourced processors for artificial intelligence development.

Chip stocks were also encouraged by major AI developer DeepSeek unveiled a model optimized for Chinese-made chips.

Semiconductor Manufacturing International Corp (HK:0981), the country’s biggest chipmaker by foundry volume, soared as much as 6% in Hong Kong trade, while major AI chips maker Cambricon Technologies Corp Ltd (SS:688256) surged 8.6% to a record high in Shanghai trade. Hygon Information Technology Co Ltd (SS:688041) rallied nearly 15%.

Hua Hong Semiconductor Ltd (HK:1347) lagged, falling 3%.

Chinese chip stocks were on a tear since last week, especially after reports said NVIDIA Corporation (NASDAQ:NVDA) had ordered some of its suppliers to halt manufacturing its China-specific H20 chip, sales of which were recently reapproved by Washington.

Nvidia’s move came as Beijing ramped up its scrutiny of U.S.-made chips, warning local AI developers against using foreign chips for critical processes. China had earlier in August also asked major AI developers including Tencent and Bytedance to justify their purchases of the chips.

Bets on local chips were furthered by DeepSeek unveiling an updated V3 model which it billed as being adapted for “the next generation of domestic chips.” The company is regarded as a bellwether for Chinese AI development after making waves with its R1 and V3 models released at the beginning of the year.

Still, recent reports said DeepSeek had delayed the release of a new AI model due to issues with training on Huawei-made chips. Huawei is at the forefront of China’s efforts to develop locally-sourced AI chips, and is considered as a major competitor for Nvidia.