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Selling in shares of Chinese start-ups making AI models deepened Friday on investor fears that the scandal engulfing Nvidia could lead to tighter restrictions from Washington on chip sales.
Major language model developers Z.ai and MiniMax fell 10 percent and 8 percent, respectively, in Hong Kong on Friday. Z.ai has lost almost a fifth of its market value over the past two days, while MiniMax has lost 15 percent.
The sell-off has extended to major Chinese tech groups such as Alibaba and Tencent, which rely on Nvidia chips to train their AI models. This week’s rout wiped out a combined $75 billion in market value for Alibaba and Tencent after their shares fell 14 percent and 8 percent respectively.
Despite export restrictions in place for the most advanced chips, many Chinese companies still rely on certain Nvidia processors to develop their AI models.
Jensen Huang, who resigned as Nvidia’s chief executive Thursday after revelations of extramarital affairs, including with an alleged Chinese spy, favored keeping sales open to Chinese companies even as the mood in Washington grew hawkish.
Without Huang at the helm, “the United States could tighten controls on chip exports at the policy and regulatory level,” said Kenny Ng, a strategist at Everbright Securities International. “Chinese technology companies with high computing power requirements could be affected. »
The unfolding scandal at Nvidia has caused consternation in China. The Foreign Ministry on Thursday warned the United States against using Huang’s relationship with a suspected Chinese spy as a pretext to tighten restrictions on exports of critical technology. The Global Times, the Communist Party’s nationalist tabloid, suggested that Huang’s downfall was part of a “political witch hunt.”
Huang had said selling chips to China benefited the United States because it would make the country dependent on American technology in the race to build cutting-edge AI.
Beijing has made a concerted effort to expand domestic chipmaking capabilities in everything from the graphics processing units made by Nvidia to the complex machine tools used to make the chips themselves.
State and local governments have invested heavily in semiconductor companies, which have benefited from the Nvidia scandal and concerns over tighter export controls. Shares of Chinese chip designer Cambricon Technologies soared more than 20 percent this week.
Some investors fear that Huang’s fall, so soon after the U.S. midterm elections, could be the start of an orchestrated campaign against advocates of greater U.S.-China engagement.
“People think the story won’t end with Jensen,” said Song Zhe, senior investment specialist at BNP Paribas Asset Management. “People don’t know where this will end.”
Shares of Chinese makers of optical equipment needed for data center chips also fell on fears of tighter U.S. restrictions. Zhongji Innolight and Eoptolink both fell more than 8% on Friday.
“There will be more and more uncertainty for these Chinese suppliers,” Song said.
Gn bussni
