China’s AI Suppliers Can’t Keep Up as Component Shortages Bite

China’s artificial intelligence hardware suppliers have a problem: keeping up with insatiable demand for their products.

Capacity constraints and a tightening supply of critical components threaten to throttle the brisk growth seen early this year, and not for a lack of AI demand.

“I believe these capacity bottlenecks are unlikely to be resolved anytime soon, certainly not within 2026, which means companies may continue to fall short of the market’s optimistic expectations,” said Xiang Xiaotian, director at Shanghai Chengzhou Investment Management.

Optical communication makers have emerged as investor favorites to lead sector outperformance, even as they face severe “growing ...