China Rejects US Chip Sales: AMD Falls 3.3%, NVDA Down 2.2% as Geopolitical Tensions Resurface

Semiconductor stocks faced sharp headwinds on May 15 as reports emerged of China pushing back against US chip sales and tightening its own semiconductor nationalism policies. AMD dropped 3.3%, Nvidia fell 2.2%, and Broadcom also retreated as investors reassessed the thesis that the Trump-Xi summit had permanently reopened China's tech market. The selloff was triggered by Samsung's weakness in Seoul (North Korea tensions) which rippled into US futures and amplified existing concerns about China's domestic chip substitution efforts.

The narrative whipsaw is stark. Earlier in the week, the US had approved H200 exports to ten Chinese companies, lifting sentiment across the sector. But by Friday, Chinese officials were signaling that Beijing has no urgent need for US chips given its progress in developing domestic alternatives like Huawei's latest processors and other fab breakthroughs. Analysts are now debating whether the H200 approval was a one-off concession or the start of a durable reopening; the evidence points to the former, as China's long-term strategy remains tech independence.

The implications for semiconductor supply chains are profound. TSMC, which manufactures chips for both Nvidia and AMD, faces binary risk: if China tightens capital controls on semiconductor imports, TSMC's revenue exposure to the mainland could deteriorate sharply. Conversely, if TSMC itself comes under pressure to limit exports to the US (via regulatory capture in Taipei), US chipmakers lose their largest manufacturing partner. Broadcom's warning last quarter that fab capacity constraints could limit semi deployments has taken on new urgency; if geopolitical fragmentation accelerates, the global fab footprint will splinter further.

The selloff reflects deeper skepticism about the durability of any US-China rapprochement. North Korea's nuclear posture, Taiwan's election cycle (2028), and competing claims in the South China Sea mean that good-faith negotiations are constantly overshadowed by flashpoint risks. Traders are repricing the probability that semiconductors will remain a proxy battlefield for years to come. The combination of supply chain fragmentation, tariff uncertainty, and capex constraints is now the base case for the sector, pressuring multiples across the board.