AVGO Stock Falls Premarket: China Reportedly Audits Broadcom’s Grip On State-Backed Data Centers

• Chinese authorities are surveying Broadcom switches used by state-owned companies, according to The Financial Times.
• The review could pave the way for greater adoption of Huawei, H3C and other domestic networking suppliers.
• AVGO shares have gained about 8% across five straight sessions.

Broadcom, Inc. stock fell 0.3% in premarket trading on Wednesday after a Financial Times report said Chinese authorities are examining the company’s networking hardware in state-backed data centers as Beijing pushes to reduce reliance on foreign technology.  

The dip follows five consecutive sessions of gains, during which shares rose about 8% and turned positive for 2026.

China Targets Broadcom Switches

China’s State-owned Assets Supervision and Administration Commission (Sasac) has in recent weeks been surveying the number of Broadcom switches deployed across state-controlled data centers, according to the FT report, which cited people familiar with the matter.

The survey is part of Beijing’s broader “domestic chips for domestic use” push, aimed at increasing the use of Chinese semiconductors and AI infrastructure across the public sector.

Initial findings suggest Broadcom switches could account for as much as 90% of the hardware used by state-owned companies, the FT reported. The findings could eventually lead to informal guidance to reduce the use of Broadcom switches in domestic data centers.

Huawei, H3C In Focus

Broadcom, Nvidia and Huawei all sell high-end data center switches in China. While state-backed data centers are already restricted from using Nvidia products, Broadcom hardware remains widely deployed.

Sasac is also examining whether Broadcom leveraged its market position to bundle products or require customers to make large purchases of switch chips, according to the report.

The potential shift could benefit Chinese suppliers including Huawei, H3C Technologies and Ruijie Networks. 

The report said Huawei has made progress in improving its networking capabilities, although industry experts cited by the FT said its switches are less energy efficient than Broadcom’s

Retail View On AVGO

On Stocktwits, retail sentiment for AVGO was ‘bearish’ on Wednesday, unchanged over the past week, as traders reposted the report on the Chinese review.

After the recent run, traders were eyeing $400 as the next major stock milestone. The stock had dipped below that level in mid-August. “400+ as per current move,” said a trader.

Year to date, AVGO stock is up a mere 6%, compared to the nearly 90% gains in the iShares Semiconductor ETF (SOXX).

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