Broadcom Stock Drops On China AI Chip Threat, Oracle Data Center Funding Setback

Broadcom Inc (NASDAQ:AVGO) shares fell Wednesday as chip stocks came under pressure following reports of a major breakthrough in China's semiconductor ambitions and uncertainty around Oracle's massive data center financing plans.

• Broadcom stock is taking a hit today. Why is AVGO stock falling?

What Happened: According to Reuters, Chinese scientists have built a prototype extreme ultraviolet (EUV) lithography machine inside a secure Shenzhen lab. Completed earlier this year and now in testing, the project was reportedly led by former engineers from Dutch chip‑equipment giant ASML, who reverse engineered its EUV technology.

While China's prototype can generate EUV light, it has yet to produce working chips. Sources say Beijing is aiming for production by 2028, though 2030 is seen as a more realistic target.

While China still faces major technical challenges, especially in replicating the precision optical systems that Western suppliers produce, the government has set a goal of producing working chips on the prototype by 2028, with sources suggesting a more realistic target of 2030.

The development marks the culmination of a six‑year government drive for semiconductor self‑sufficiency, a top priority for President Xi Jinping. Tech giant Huawei is coordinating efforts across companies and research institutes, with insiders relating the initiative to a "Manhattan Project" for chips.

ASML's CEO Christophe Fouquet previously said China would need "many, many years" to master EUV technology, but the existence of this prototype suggests progress may be faster than expected. One source familiar with the project said "China wants the United States 100% kicked out of its supply chains."

Adding to the sector's concerns, reports indicate that Oracle’s talks for an equity deal to fund its $10 billion Michigan data center no longer involve key partner Blue Owl Capital. It was reported that the project had less favorable lease and debt terms compared to other deals.

The news comes as Oracle faces mounting concerns over rising debt and massive AI spending. People familiar with the matter reportedly said Oracle is yet to find a partner to take Blue Owl's place in backing the planned facility.

AVGO Price Action: Broadcom shares were down 5.08% at $323.78 at the time of publication on Wednesday, according to Benzinga Pro.

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