Investors are betting the recent flurry of talk by Chinese tech firms will translate into real products down the road
FROM Huawei Technologies to Alibaba Group, China’s biggest tech firms have vied with each other this month to tout their latest artificial intelligence (AI) chip advancements. Their growing public swagger is gaining investors’ attention, igniting a US$240 billion stock market rally.
On Thursday (Sep 18), Huawei for the first time publicly laid out its three-year road map for chip development, boasting of “super clusters” and vastly faster AI chips intended to supplant restricted Nvidia accelerators.
A day prior, state media showcased Alibaba’s growing footprint within the country’s No 2 wireless operator.
The twin developments follow a panoply of revelations about similar strides made by peers from Baidu to Cambricon Technologies over the past month or so. Together, they underscore how 2025 is shaping up to be an inflection point in China’s years-long effort to develop home-grown chips in the face of US sanctions.
It remains to be seen whether any of the claims will hold up over time – and whether their designs can be produced at scale.
Nvidia’s dominance of the market is such that even Advanced Micro Devices (AMD) and Intel are relegated to also-rans in the hot AI space. Elsewhere, companies such as ASML dominate high-end chip equipment. Taiwan Semiconductor Manufacturing Co makes most of the world’s most sophisticated processors – and is technically barred from doing business with a swath of Chinese firms sanctioned by the US government.
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Still, investors are betting all that talk will translate into real products down the road. China’s tech stock index ended Wednesday at its highest level since 2021, a rally that began toward the end of August, led by Alibaba’s roughly 37 per cent leap.
“There will be more DeepSeek moments coming in China, not just on the AI side but across all the innovative industries that China is excelling in right now,” said Francis Tan, chief strategist at CA Indosuez Wealth Asset Management.
Washington for years has tried to ringfence China, for fear that US technology will further its economic and military ambitions. In response, Beijing has exhorted the country’s tech firms to climb the value chain. Those restrictions, which cover a range of products beyond just Nvidia’s processors, have been a central theme of delicate trade talks.
Chinese chips generally remain inferior to those from Nvidia or AMD. But in recent years, many have found innovative solutions to get around power and performance ceilings. Huawei talked on Thursday about how it can group or cluster up to a million chips, theoretically bridging that gap.
“Huawei unveiled an ambitious AI chip road map,” said Charlie Dai, principal analyst at Forrester Research. “While Huawei acknowledges its chips lag behind Nvidia in per-chip performance, it compensates with massive clustering, proprietary interconnect protocols and cost advantages.”
The recent Chinese stock rally began in earnest around the time Alibaba reported earnings in late August, when it revealed a triple-digit jump in AI-related sales and a much faster-than-anticipated rise in revenue from its cloud unit. That triggered a US$50 billion next-session surge in Alibaba stock, alone.
The 30 members of the Hang Seng Tech Index have added a combined US$240 billion in market value since.
Alibaba’s chip endeavor mirrors projects underway at major Chinese tech firms. In August, Baidu said it won a one billion yuan (S$1.86 billion) contract to provide China Mobile – Unicom’s larger rival – with servers powered by its Kunlun chips.
Also in late August, Cambricon announced that it had swung to a record profit in the first half. Investors deemed that a strong signal that Chinese semiconductors were finally gaining traction – at home, at least.
Beijing is helping.
Over the summer, a key regulator began pushing local firms to ditch Nvidia’s H20, the very chip the Trump administration allowed this year to be sold in China. Just this week, the Cyberspace Administration of China told companies to stop testing Nvidia’s RTX Pro 6000D, a semiconductor for workstations that can be repurposed for AI applications.
Bloomberg Intelligence analyst Michael Deng said Beijing’s reported aim to halt purchases of the RTX Pro 6000D “would mark a strategically calibrated escalation in US-China tech competition”.
“If true, the halt would further redirect spending to domestic accelerators while underscoring China’s broader message of technological self-reliance aimed at both Washington and Nvidia. Above all, it would reflect growing confidence in its own chip-making capabilities and steady progress in advanced semiconductor development,” he added.
Much now hinges on whether key Chinese manufacturers such as Semiconductor Manufacturing International Corp (SMIC) can effectively produce chips on a grand scale by increasing yields, or the proportion of silicon off assembly lines that ends up being usable.
This week, the Financial Times reported that SMIC is testing locally made equipment that can help it get there.
“With the potential for more DeepSeek moments, coupled with still low valuations in China’s tech sector, I think we are going to see more opportunities coming up,” said CA Indosuez’s Tan.
