Chinese AI Stocks Fall as Congress Builds Support for Tighter Nvidia Chip Curbs

Z.ai dropped 12% and MiniMax Group 8.4%, and the optical component makers Zhongji Innolight and Eoptolink Technology each lost more than 8%, according to Reuters. Domestic chipmakers moved the other way. Shanghai-listed Cambricon Technology rose 1.2% and was heading for a 22% weekly gain, its best in six months, and Hygon Information Technology was on course for a 7% rise over the week. The Shanghai Composite and CSI300 indices were little changed by the lunch break.

The split shows where the risk sits. Chinese companies that train large models depend on Nvidia hardware, often rented abroad, while homegrown chip designers stand to win business if that access narrows. Huang, who resigned as Nvidia's chief executive on Thursday after reports of a relationship with Alice Huang, an executive at the Nvidia partner Megaspeed whom US authorities suspect of spying for Beijing, had been the industry's most prominent advocate of keeping sales to China open. Beijing has denied that Alice Huang is a spy.

Four Bills on the Table

House Speaker Mike Johnson, a Louisiana Republican, said on Thursday that "there's a developing consensus in Congress" on limiting chip exports to China, calling it "an important position to take." A Senate aide told Reuters that Republicans want to attach new AI chip export restrictions to the annual defense authorization bill, which usually passes with support from both parties. A similar measure was left out of the defense bill last December.

The bills promoted by lawmakers since Monday are the AI Overwatch Act, which would give Congress more say over advanced chip exports; the Chip Security Act, which would require companies to track the location of advanced AI processors to prevent smuggling; the Match Act, which would press US allies to restrict sales and servicing of chipmaking equipment bound for China; and the Remote Access Security Act, which would give the Commerce Department tools to stop Chinese firms renting overseas data centres to reach Nvidia chips.

Remote access is the immediate concern for Chinese buyers. Reuters has reported that Chinese AI companies are trying to rent Nvidia-powered computing capacity outside China before the rules can change. The US government is also working on a national security measure to bar imports of new Chinese optical transceivers, which would hit Innolight and Eoptolink, both of which earn most of their revenue in the United States.

The Shanghai Data Centre

The pressure grew on Friday when Bloomberg reported, citing documents it had reviewed, that a Chinese company founded by Alice Huang procured smuggled AI chips that were installed at a Shanghai data centre with links to Megaspeed International. A person familiar with the matter told Bloomberg that some of the servers were first sold to Aperia Cloud Services, a Singapore-based Nvidia Cloud Partner. Megaspeed has said it will cooperate with the US investigation.

Analysts expect Chinese model developers to bear the brunt. Gavekal Dragonomics wrote that the biggest risk to China's AI industry is that the scandal leads to tighter US export controls, possibly by the end of the year, and that a more AI-sceptical Congress will make computing power harder for Chinese firms to get. "The market fears that after Huang's resignation, Nvidia will reduce sourcing from Chinese suppliers," said Wu Zhou, a fund manager at Shenzhen Deyuan Investment. Chelsey Tam, a senior equity analyst at Morningstar, said companies focused on large language models would be hurt if access is tightened.

Alibaba fell as much as 7.3% in Hong Kong, according to Bloomberg. Julia Pan of UOB Kay Hian told Bloomberg that Chinese cloud providers have built chip stockpiles since early 2026 but that prolonged restrictions could slow research and development. Alibaba, which is preparing a Hong Kong listing for its T-Head chip unit, reports earnings on November 19.

Reuters reported that Huang is expected to testify before Congress before Thanksgiving on November 26. House Foreign Affairs Committee chairman Brian Mast said on Thursday that congressional staff had spoken with Nvidia the previous night about a date and location.