Nvidia, Broadcom Lead Chip Stocks Lower Amid China Concerns to End a Strong Month

The chips are down to close out August.

A range of chip stocks slid Friday, weighing on the major U.S. equities indexes in the last trading session of the month. China concerns weighed on the sector, but that wasn’t the only factor that pulled shares lower.

The tech sector led losses on the S&P 500 Friday, with Nvidia (NVDA) among its biggest decliners. The giant’s shares lost over 3% amid uncertainty about its China sales after it reported quarterly results Wednesday. Broadcom (AVGO), which reports next week, saw its stock fall close to 4%. Advanced Micro Devices (AMD) and other chip stocks were also lower, with the PHLX Semiconductor Index (SOX) down roughly 3%. 

Marvell Technology (MRVL) shares plunged the most of any stock in the sector index, losing nearly a fifth of its value after the firm posted an outlook that missed analysts’ estimates, with concerns about U.S. restrictions on chip sales to China and Marvell’s large exposure to the country adding to worries.

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.