Chinese artificial intelligence (AI) stocks fell on Thursday (12 November), with Alibaba shares dropping more than 7% at one point, as an unfolding controversy over alleged extramarital affairs and espionage involving Nvidia chief executive Jensen Huang fuelled concerns that Chinese cloud service providers could face tighter US scrutiny when obtaining advanced chips.
Bloomberg reported that shares in Chinese technology giant Alibaba Group fell as much as 7.3% on Thursday, dragging down the Hang Seng Tech Index.
The Financial Times previously reported that Alibaba was cloud computing service provider Megaspeed’s largest customer. Through a Singapore subsidiary, Alibaba had extended loans to Megaspeed’s Malaysian subsidiary Speedmatrix, secured against Speedmatrix’s entire business.
Former Megaspeed executive Alice Huang is one of the women linked to Jensen Huang in the controversy over alleged extramarital affairs. US authorities have also alleged that she worked for Chinese intelligence.
Shares in other companies along China’s AI supply chain also fell, with large language model developers Zhipu and MiniMax both dropping at least 8%.
Access to advanced chips has long been crucial for Chinese AI model developers. Analysts noted that scrutiny is now intensifying, and how long tighter US enforcement lasts will pose a real challenge for Chinese cloud service providers. They have been stockpiling chips since the start of this year and therefore still have some inventory as a buffer, but their research and development schedules will inevitably be delayed.
Asked on Thursday whether the controversy surrounding Jensen Huang would affect China-US relations and whether the US would use it to further restrict technology exports to China, China’s Ministry of Foreign Affairs urged the US to stop fabricating espionage narratives as a pretext for imposing a technology blockade.
China also said the two sides remained in close communication over interactions between their leaders. The Chinese and US presidents are expected to meet again next week at the Asia-Pacific Economic Cooperation (APEC) summit in Shenzhen.
