Shares of AI model developers Z.AI and MiniMax dropped amid concerns that Chinese companies could face greater difficulty accessing advanced AI chips.There are fears that Washington could introduce tighter restrictions on China's access to advanced processors, including through the rental of computing power from overseas data centres. Chinese AI stocks fell sharply on Friday as investors worried that Nvidia CEO Jensen Huang's resignation could further deepen the technology divide between the US and China.Shares of AI model developers Z.AI and MiniMax dropped amid concerns that Chinese companies could face greater difficulty accessing advanced AI chips.

Data centre suppliers Zhongji Innolight and Eoptolink Technology also saw their shares decline, as both companies depend heavily on the US market, reported Reuters.However, domestic Chinese chipmakers gained as investors expected the latest developments to encourage greater reliance on homegrown technology. The Shanghai Composite Index and the CSI 300 remained largely unchanged by Friday's lunch break.CHINESE AI FIRMS FACE CHIP SUPPLY CONCERNSInvestors are concerned that Huang's exit could affect Nvidia's sourcing from Chinese suppliers and make access to its advanced chips more difficult.

There are also fears that Washington could introduce tighter restrictions on China's access to advanced processors, including through the rental of computing power from overseas data centres.Such restrictions could hurt Chinese AI companies that depend on powerful chips to develop and run their AI models. However, they could benefit domestic chipmakers as China looks to strengthen its own semiconductor industry.

Shanghai-listed AI chipmaker Cambricon Technology rose 1.2% on Friday and was on track to gain 22% for the week. This would be its strongest weekly performance in six months.Another domestic chipmaker, Hygon Information Technology, was poised to gain 7% during the week.US-CHINA CHIP TENSIONS COULD DEEPENThe developments have added to concerns over China's access to advanced American technology.Nvidia CEO Jensen Huang stepped down on Thursday following revelations about alleged extramarital affairs, including one involving a woman suspected of having links to Chinese espionage.

The controversy has triggered concerns across the AI industry.US House Speaker Mike Johnson said on Thursday that support was growing in Congress for restricting chip exports to China.Meanwhile, Chinese AI companies are looking to rent Nvidia-powered computing capacity outside China. They fear that the latest developments could prompt Washington to tighten restrictions on their access to advanced processors, even through overseas cloud computing services.Huang had been one of the strongest opponents of strict restrictions on chip exports to China.

His departure, along with a more AI-sceptical US Congress, could make it harder for Chinese AI companies to access the computing power they need.Morningstar senior equity analyst Chelsey Tam also warned that tighter US restrictions on access to American chips could hurt Chinese companies developing large language models (LLMs), the report mentioned.CHINESE DATA CENTRE SUPPLIERS FACE FRESH RISKSThe uncertainty is also weighing on Chinese companies that supply equipment to data centres.The US government is working on a proposal to restrict imports of new Chinese optical transceivers on national security grounds.This could affect suppliers such as Zhongji Innolight and Eoptolink Technology, both of which generate most of their revenue from the US market.The proposal adds another challenge for these companies, which are already facing concerns over the future of US-China technology ties.With the possibility of tighter chip restrictions, investors are now weighing the risks for Chinese AI developers and hardware suppliers, while domestic chipmakers could emerge as potential beneficiaries of the shift towards technological self-reliance.- Ends