Is Fabrinet (FN) Worth Buying on the China H20 Chip Sale Ban?

We recently published a list of Buy The Dip On These 10 Semiconductor Stocks Tumbling On China H20 Chip Sale Ban. In this article, we are going to take a look at where Fabrinet (NYSE:FN) stands against other semiconductor stocks tumbling on China H20 chip sale ban.

Semiconductor manufacturers are at the forefront of the technological battle, especially in the context of China’s rapid tech developments. One would have thought President Trump would take it easy on the chipmakers owing to their critical position in the US and global tech infrastructure.

However, investors are now finding out that semi stocks aren’t immune to tariffs, with the latest round of tariffs expected to cost manufacturers around $1 billion. This cost will be incurred through lost sales, increased regulatory compliance, and elevated supply chain costs.

Uncertainty regarding the exact details of the tariffs continues to cause chaos in the market. Chip stocks are sliding as the leading chipmaker, led by Jensen Huang, finds its H20 chips banned from export to China. As the leading chipmaker tries to steer its way out of the crisis, other companies that rely on this giant for business are also trying to figure out what to do.

We decided to take a look at such stocks and see if they offer value. Remember that the H20 chips were made specifically for China, and a ban on selling them is only a temporary headwind, not something that threatens the company’s moat.

To come up with the list of semiconductor stocks worth buying on the China H20 chip sale ban, we considered stocks that are an integral part of the semiconductor supply chain and ranked them by hedge fund interest in their stocks.

Fabrinet (NYSE:FN)

Number of Hedge Fund Holders: 36

The market has been harsh on Fabrinet for many reasons. One look at the one-year chart and you can see the market has struggled to value the stock amid changing economic conditions for the semiconductor industry. There are concerns that the company relies too heavily on the Jensen Huang-led chipmaker, and any diversification on the chipmaking giant’s part could signal doom for Fabrinet.

B. Riley recently upgraded the stock from Sell to Neutral but was quick to mention the risks associated with the stock:

“We still remain concerned about FN’s 800G sales to Nvidia, which could come under pressure as hyperscalers increasingly buy transceivers directly rather than through NVDA. Complicating the outlook is the tariff uncertainty. While the situation remains fluid, the tariff rate for Thailand is currently at 36%.”

While the concerns are valid, investors see the recent interest from Amazon as a sign of safety. Last month, Fabrinet issued a warrant to Amazon allowing the tech giant to buy up to 381,922 shares in the company. Fabrinet is a critical supplier for Amazon, and this warrant is proof that the company’s tech is good enough to survive even if Jensen Huang’s firm diversifies away from the firm.

Overall, FN ranks 8th on our list of semiconductor stocks tumbling on China H20 chip sale ban. While we acknowledge the potential of FN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than FN but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.