What are the possible supply‑chain disruptions for both companies arising from the Chinese directive?

Supply‑chain impact

The Chinese directive effectively tells domestic manufacturers to stop buying or integrating Nvidia’s newly‑approved H2O GPUs and AMD’s competing silicon. For Nvidia, any Chinese fab that still relies on its GPUs for AI‑accelerated servers, data‑center builds, or edge‑computing will now have to pause shipments and re‑engineer product designs. This creates a short‑term “chip‑gap” that could force Nvidia to divert inventory to other regions, compress its revenue pipeline from the world’s largest AI‑hardware market, and increase logistics costs as it seeks alternative, higher‑priced suppliers.

AMD faces a parallel risk. While the warning is less specific to a single product line, the broader prohibition on using AMD chips in Chinese‑manufactured equipment means the company could lose a sizable portion of its volume in the country’s fast‑growing PC, gaming‑console, and server‑OEM segments. The loss of Chinese demand will likely push AMD to re‑allocate capacity to other markets, but the shift will be hampered by longer lead‑times and higher freight rates, tightening its supply chain and compressing margins.

Trading implications

• Fundamentals: Both firms now carry a higher “geopolitical‑risk” premium. Anticipated Q4 revenue from China‑based data‑center and consumer sales should be trimmed, while any upside from the recent US‑China de‑escalation is muted.
  
• Technicals: Nvidia (NVDA) is testing the lower‑50% of its 2024 rally (≈ $420) and has broken a descending trend‑line on the 4‑hour chart, suggesting a near‑term correction if the supply‑chain shock materialises. AMD (AMD) is holding the 20‑day moving average near $95 but faces a bearish divergence on the 1‑hour RSI, hinting at further downside pressure.
  
• Actionable view:
  
  • Long‑short bias: Reduce exposure to NVDA and AMD on the upside; consider short‑positions or protective puts if you hold large long stances.
    
  • Risk‑off play: Allocate a modest portion of capital to defensive semiconductor peers (e.g., Taiwan Semiconductor, Broadcom) that are less dependent on Chinese end‑markets.
    
  • Entry points: If the stocks pull back 5‑8 % from current levels, a contrarian entry could be justified on the premise that the Chinese directive may be short‑lived or that companies will secure alternative supply routes.
    

In short, the Chinese warning injects a near‑term supply‑chain head‑wind for both Nvidia and AMD, eroding Chinese‑derived revenue and prompting a bearish technical tilt. Traders should hedge exposure, target lower‑risk semiconductor names, and look for discounted entry levels if the sell‑off overshoots the fundamental impact.