STORY: China's chip index leapt to close at a three-year high on Monday (November 11).

That's on bets Beijing will accelerate its chip-making efforts after the U.S. ordered Taiwan's TSMC to suspend shipments of advanced semiconductors to Chinese clients.

Reuters reported that the chipmaker will halt shipments from Monday.

Analysts said that while the move might lead to some short-term pain for Chinese firms, it could boost the domestic sector.

Specifically, those companies involved in making chips for AI and graphic processing units.

The CSI Semiconductor Index jumped more than 6% during trading on Monday to the highest since December 2021.

Shares in SMIC, China's largest foundry and the country's main alternative to TSMC, rose more than 4%.

Many rely on Taiwan-based TSMC, the world's leading contract chipmaker whose clients include Apple, for production.

And now it joins the list of other chipmakers, including Nvidia and AMD, that have been barred by the U.S. from selling to Chinese clients.

In response to these restrictions, Chinese firms and chip designers have in recent years sought to design their own advanced processors.