What's Going On With Nvidia Stock Monday?

Many Chinese semiconductor design companies are partnering with Malaysian firms to assemble high-end chips, mainly graphics processing units (GPUs). 

This strategy is a precaution against the potential expansion of U.S. sanctions on China's chip industry. 

China is a crucial market for Nvidia Corp NVDA, a leading GPU and AI technology producer. Analysts highlighted that Nvidia has a leading 75%-80% position in the rapidly growing accelerator space with next-generation GPUs. 

The assembly process, which doesn't violate U.S. restrictions, is distinct from the fabrication of chip wafers, Reuters reports.

The U.S. has been imposing restrictions to limit China's access to high-end GPUs, which are crucial for artificial intelligence advancements, supercomputers, and military applications. 

As a result, Chinese semiconductor firms, especially smaller ones, face challenges in securing advanced packaging services domestically. 

Advanced chip packaging, a key technology in the semiconductor industry, significantly enhances chip performance. 

It often involves creating chiplets, where multiple chips are packaged together to function as a single, powerful unit.

Malaysia, a significant player in the semiconductor supply chain, is emerging as a preferred destination for Chinese firms seeking assembly services outside China. 

Companies like Unisem, majority-owned by China's Huatian Technology, have reported increased business from Chinese clients. 

Malaysia's appeal to Chinese firms stems from its good relations with China, affordability, experienced workforce, and advanced technology. The country currently holds 13% of the global semiconductor packaging and testing market and aims to increase this to 15% by 2030. 

Several Chinese firms, including Xfusion and StarFive, are expanding their operations in Malaysia. 

Significant chip investments in Malaysia from companies like Germany's Infineon and U.S. chipmaker Intel further underline the country's growing importance in the industry.

Additionally, Chinese firms are exploring chip assembly in countries outside China, like Singapore, Vietnam, and India, to mitigate geopolitical risks between the U.S. and China and to ease access to non-Chinese markets.

In November, Nvidia lost to Huawei Technologies Co for a sizeable artificial intelligence chip order from Chinese tech giant Baidu Inc BIDU, reportedly due to the U.S. embargo on AI technology chips for China.

Price Action: NVDA shares traded higher by 0.46% at $491.15 premarket on the last check Monday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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