Broadcom Inc. (AVGO) had a rough Wednesday, falling alongside other chip stocks after two unsettling pieces of news hit the semiconductor sector. First, China apparently made some unexpectedly fast progress on advanced chipmaking equipment. Second, Oracle's ambitious data center financing plans appear to be unraveling.

China's Chip Ambitions Take Shape

According to Reuters, Chinese scientists have successfully built a prototype extreme ultraviolet lithography machine inside a secure Shenzhen lab. The project wrapped up earlier this year and is now in testing. Here's the eyebrow-raising part: it was reportedly led by former engineers from Dutch chip equipment giant ASML, who essentially reverse-engineered the company's EUV technology.

Now, before anyone panics, the prototype can generate EUV light but hasn't actually produced working chips yet. Beijing is targeting production by 2028, though sources suggest 2030 is a more realistic timeline. China still faces substantial technical hurdles, particularly in replicating the precision optical systems that Western suppliers produce.

This development represents the culmination of a six-year government push for semiconductor self-sufficiency, a top priority for President Xi Jinping. Tech giant Huawei is coordinating efforts across companies and research institutes, with insiders comparing 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 this prototype suggests progress may be moving faster than anticipated. One source familiar with the project put it bluntly: "China wants the United States 100% kicked out of its supply chains."

Oracle's Financing Troubles

Adding pressure to the sector, 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. Apparently, the project had less favorable lease and debt terms compared to other deals.

The timing is awkward, as Oracle faces mounting concerns over rising debt and massive AI spending. People familiar with the matter say Oracle hasn't found a replacement partner to take Blue Owl's place in backing the planned facility.

Broadcom shares were down 5.08% at $323.78 at the time of publication Wednesday.