Will Chinese firms seek alternative chip suppliers, and how could that shift the competitive landscape?

Answer

Yes – Chinese manufacturers are likely to look for alternative silicon sources. Beijing’s warning against the use of Nvidia’s H‑200 / H‑200 0‑series (the “H20” chips) signals a clear policy push to reduce dependence on U.S.‑origin GPUs, especially after Nvidia secured a licence to ship those parts again. The immediate effect will be a supply‑chain diversification wave: firms will turn to Intel’s Xe‑GPU line, AMD’s lower‑tier Radeon cards, and, increasingly, home‑grown Chinese solutions such as the “Kunlun” and “Sophon” AI accelerators from companies like Cambricon, Horizon and SMIC. This re‑routing of demand will dilute Nvidia’s exposure to the world‑largest AI‑compute market, while giving AMD a modest upside as it can fill the gap with its Radeon Pro and Instinct series, and boosting the valuation of Chinese chip‑makers that are still in the early‑stage, high‑growth segment.

Trading implications

• Nvidia (NVDA) – The stock is already priced for a strong AI‑growth narrative; the regulatory head‑wind adds a near‑term downside catalyst. On the daily chart, NVDA is holding above the 200‑day SMA (~$460) but faces a bearish MACD divergence and a 1‑month down‑trend on the 20‑day EMA. A break below the $460 support level could open a short‑to‑cover swing to $430‑$410, reflecting the potential loss of Chinese AI‑compute spend. Conversely, a firm‑wide earnings beat or a clear policy reversal would re‑establish the uptrend.

• AMD (AMD) – With Nvidia’s Chinese market constrained, AMD could capture a portion of the displaced demand, especially for its Instinct accelerators. Technically, AMD is testing the $115 resistance; a breakout with volume would justify a long position targeting $130‑$140, while a failure to hold $105 could trigger a short to $95. Fundamental upside is modest but real, given the “second‑source” role Chinese firms may adopt.

• China‑focused semiconductor plays (e.g., SMIC, TSMC‑listed China‑ADR, or the “China Semiconductor ETF” ETF‑CHIP) – These names are likely to benefit from any policy‑driven shift toward domestic supply. Expect a risk‑on rally on any positive domestic‑chip news, with the sector’s relative strength index (RSI) already in the 60‑70 range on the 4‑hour chart, indicating room for upside. A breakout above the $45‑$48 resistance on SMIC, for example, could signal the start of a broader re‑allocation flow.

Bottom line: Chinese firms will indeed seek alternative chip suppliers, which will compress Nvidia’s growth premium, open a modest upside window for AMD, and fuel a rally in domestic Chinese semiconductor stocks. Traders should consider short‑to‑cover or defensive positioning in NVDA if it breaks under $460, look for a breakout long in AMD around $115, and keep a long exposure to China‑centric chip equities as a thematic play on supply‑chain diversification.