Chinese Chip Stocks Surge as Beijing Moves to Ban Foreign AI Chips in State Projects

Shares of major Chinese semiconductor firms soared on Thursday following reports that Beijing plans to prohibit the use of foreign-made artificial intelligence (AI) chips in state-funded data centres. According to a Reuters report, the new directive instructs government-backed data centre projects to exclusively use domestically manufactured AI chips, reinforcing China’s drive toward technological self-reliance.

The policy reportedly mandates that ongoing projects using foreign chips but less than 30% complete must remove or cancel those components. The move signals a significant escalation in China’s efforts to reduce dependence on U.S. semiconductor companies such as NVIDIA Corporation (NASDAQ: NVDA), which has faced increasing restrictions from Washington over advanced chip exports to China.

Following the announcement, Chinese chip stocks rallied sharply. Cambricon Technologies Corp (SS:688256) surged 7% in Shanghai, while Hong Kong-listed Semiconductor Manufacturing International Corp (SMIC) (HK:0981) climbed 5%. Hua Hong Semiconductor (HK:1347) gained 4%, and tech giant Meituan (HK:3690) advanced 2% during Hong Kong trading. The Hang Seng TECH sub-index also jumped over 2%, reflecting strong investor confidence in China’s semiconductor sector.

This policy shift highlights Beijing’s determination to strengthen its domestic chipmaking capabilities and safeguard its AI ambitions amid intensifying U.S.-China tech tensions. The move follows the Biden administration’s decision to restrict Nvidia’s most advanced Blackwell AI chips for domestic use only, citing national security concerns. As the global semiconductor race intensifies, China’s latest directive marks a pivotal moment in its strategy to achieve chip self-sufficiency and fortify its position in the global AI industry.