In a new development that underscores the intensifying technological rivalry between the United States and China, Chinese AI chipmaker Cambricon Technologies Corp. (688256.SS) experienced a dramatic surge in its stock price on Monday.
The company’s shares surged 20%, gaining nearly 50 points to trade above $289 per share, leading a broader rally in the Chinese semiconductor sector. This surge came in the wake of a Bloomberg News report revealing Beijing’s escalating efforts to encourage domestic companies to abandon Nvidia Corp. (NVDA) processors in favor of local alternatives.
Cambricon, which holds the distinction of being the largest publicly traded designer of chips crucial for AI development, witnessed heavy trading as investors rushed to capitalize on the potential windfall from China’s push for technological self-reliance.
The ripple effects of this policy shift were felt across the Chinese chip industry, with several firms ranking among the top gainers on the benchmark CSI 300 index. Notably, Semiconductor Manufacturing International Corp. (0981.HK) saw its stock price jump by nearly 13% in Shanghai, while Naura Technology Group Co. (002371.SZ), a prominent gear maker, climbed more than 32 points.
According to Bloomberg, the catalyst for this market frenzy was the reported discouragement by Chinese regulators against the purchase of Nvidia’s H20 chips, which are integral to the development and operation of AI models.
It’s worth noting that this policy has been implemented as guidance rather than an outright ban, reflecting Beijing’s delicate balancing act between fostering domestic innovation and avoiding further strain on its AI startups or exacerbating tensions with the United States.
This strategic move by the Chinese government serves a dual purpose. Firstly, it aims to bolster the market share of domestic AI chipmakers, with Cambricon and Huawei Technologies Co. standing as the country’s leading manufacturers in this space. Secondly, it prepares local companies for potential additional restrictions from the US, ensuring a degree of technological autonomy in the face of geopolitical uncertainties.
The ramifications of this policy shift extended beyond Chinese borders, with Nvidia’s shares currently trading in the red at $120.56 p/sh. This development is part of a broader trend in China’s tech policy, as evidenced by earlier directives to local electric-vehicle manufacturers to source more of their supplies from domestic chipmakers.
As the global tech landscape continues to evolve, with national interests increasingly intertwined with technological capabilities, the Chinese government’s push for self-sufficiency in critical technologies is reshaping market dynamics and corporate strategies alike. The surge in Cambricon’s stock price and the broader sector rally serve as a testament to the profound impact of these policy shifts on the global semiconductor industry and the future of AI development.
Reference: Bloomberg
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