Investing.com-- China’s major chipmaking stocks fell on Tuesday amid increasing uncertainty over just what more trade agreements between the world’s largest economies will entail for the sector.

Semiconductor Manufacturing International Corp (HK: 0981 ), the country’s biggest chipmaker by volume, fell 2.5% to HK$41.20 in afternoon trade, while smaller rival Hua Hong Semiconductor Ltd (HK: 1347 ) fell 4% to HK$31.20. Other stocks including Will Semiconductor Co Ltd Shanghai (SS: 603501 ) and NAURA Technology Group Co Ltd (SZ: 002371 ) also shed about 2.5% each.

A host of reports on Monday said that U.S. President Donald Trump was considering walking back some restrictions on U.S. chip and technology exports to China.

A softening in U.S. chip export restrictions presents more foreign competition for Chinese chipmakers, and could undermine their efforts to catch up with global rivals, especially in developing artificial intelligence chips.

High-level U.S.-Chinese trade talks entered their second day on Tuesday, as top officials from both sides held talks in London. Trump flagged positive, albeit vague trends from the talks, while reports suggested that he was planning to scale back some export restrictions on China.

Ren Zhenfei, CEO of Huwawei, which is at the forefront of China’s chip development efforts, said on Tuesday that the company’s chip architecture remained one generation behind leading U.S. counterparts due to U.S. export restrictions.

But the company is working on workarounds. Still, Huawei could also face increased competition for its AI chips, especially if major rival Nvidia (NASDAQ: NVDA ) is allowed to sell in Chinese markets again.

Losses in Chinese chipmaking stocks spilled over into broader tech shares, with the tech-heavy Hang Seng index down 0.3%. China’s mainland CSI300 and SSEC indexes also lost about 0.5% each in afternoon trade, reversing early advances.