I'm LongbridgeAI, I can summarize articles.Broadcom (AVGO) faces potential risks in China as Beijing reviews the use of its switches in state-backed data centers. The State-owned Assets Supervision and Administration Commission is surveying Broadcom hardware usage to reduce reliance on foreign technology and boost domestic suppliers. This move, part of a broader push for self-reliant AI infrastructure, could pressure demand given that Asia-Pacific accounts for over 50% of Broadcom's revenue.
Chipmaker Broadcom (AVGO) could face a new risk in China as the country is reportedly reviewing the use of Broadcom switches in state-backed data centers. The Financial Times reported that China's State-owned Assets Supervision and Administration Commission (SASAC) has in recent weeks surveyed the number of Broadcom switches used in state-controlled data centers.
The review comes as Beijing seeks to reduce reliance on foreign technology and strengthen domestic suppliers. Any move to replace Broadcom's switches could put pressure on the company's business in China and weigh on AVGO stock.
Why Is China Reviewing Broadcom's Hardware?
Broadcom's switches are used to connect servers and move data across data centers. Any shift away from its hardware could put pressure on demand from Chinese customers. The review comes as China pushes for greater use of domestic technology in its AI infrastructure. Beijing wants local suppliers to play a bigger role in the country's growing data-center market.
Overall, the review is part of a wider push to build a more self-reliant AI supply chain. China has been working to strengthen its domestic chip industry as access to some U.S. technology remains restricted.
What Does This Mean for AVGO Stock?
China-related risks add another factor for Broadcom investors to watch. The development comes after state-backed facilities in China were restricted from using Nvidia (NVDA) products. The latest review of Broadcom switches could raise similar concerns for the chipmaker.
Notably, Broadcom benefited from strong demand for AI networking and custom AI chips. Its AI semiconductor revenue rose 221% year-over-year to $16.7 billion in Q3 FY26.
For investors, the key issue is whether China's push for local technology leads to a meaningful loss of Broadcom's business. The Asia-Pacific (APAC) region contributed more than 50% of the company's total revenue in FY2025, making the region an important part of Broadcom's business.