Nvidia and Broadcom Drag Chip Stocks Lower Amid China Worries—Yet Sector Still Closes Strong Month

Chip stocks took a hit as Nvidia and Broadcom led declines—spooked by fresh China trade tensions. But don’t let the dip fool you: the sector still wrapped up a notably strong month.

Why the pullback? Geopolitics, again. Fears over tightened export controls and weaker demand from China rattled investors—who’ve otherwise been riding a wave of AI optimism and data center demand.

No surprise here—when China sneezes, semiconductor supply chains catch a cold. But let’s be real: the street’s been pricing in perfection anyway. One bad day doesn’t break a bull run.

So while the usual suspects fret over tariffs and trade, the real players are stacking shares on weakness. Because in tech, every panic is just a discount in disguise.

Losses Come at the End of a Strong Month for Chip Stocks

The TRUMP administration said Friday that it’s eliminating a Biden-era loophole allowing Samsung and SK Hynix subsidiaries in China to import American chipmaking equipment and software without a license, which could make it more difficult for the companies to upgrade plants and affect supply chains for other chip firms that rely on their manufacturing services. The rule is set to take effect in January. 

“The Trump Administration is committed to closing export control loopholes—particularly those that put U.S. companies at a competitive disadvantage. Today’s decision is an important step towards fulfilling this commitment," Under Secretary of Commerce Jeffrey Kessler said.

Samsung and SK Hynix, which both make chips for Nvidia and Broadcom, did not immediately respond to Investopedia's request for comment. Intel (INTC), which completed the sale of its facility in Dalian, China to SK Hynix earlier this year, was also named in Friday’s notice.

Meanwhile, Alibaba Group's (BABA) cloud computing unit reportedly developed a new chip more advanced than its legacy products that could help fill the void left by Nvidia's H20 AI chip that has yet to resume sales in China. Shares of Alibaba, also bolstered by its latest quarterly results, surged 13%.

August has been a strong month for most chipmakers, with the PHLX Semiconductor Index set to post gains for August on Optimism about AI-driven growth, which helped buoy the S&P 500 to a record high yesterday.