Asian chip stocks tumble: China competition and AI investment fears rattle markets
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Asian semiconductor stocks tumbled on Tuesday, led by South Korea, as investors questioned lofty valuations amid concerns over AI infrastructure financing and intensifying competition from China.
South Korea-led decline
Shares in memory-chip giants Samsung Electronics and SK Hynix plunged 13.4% and 14% respectively. Together, they account for nearly half of the benchmark KOSPI index, which was down about 9.4%.
Japanese flash memory-chip maker Kioxia Holdings slumped nearly 18%, while Taiwanese chip designer MediaTek fell more than 9% in morning trade.
SK Hynix’s U.S. shares closed 7.5% lower at $143.02 overnight, the first time below their $149 IPO price since listing this month.
AI sentiment shifts
SK Hynix, a key supplier of high-bandwidth memory (HBM) chips to Nvidia, has been one of the biggest beneficiaries of the AI spending boom. Its shares are particularly sensitive to shifts in investor sentiment toward the sector.
Analysts said the selloff reflected concerns over AI infrastructure financing, China’s technological advances, and rising competition from Chinese firms.
Han Ji-young, an analyst at Kiwoom Securities, said reports that Chinese companies were developing domestic deep ultraviolet (DUV) lithography equipment reignited concerns that Chinese memory-chip makers could accelerate capacity expansion, intensifying competition in the global memory market.
Investors are also becoming increasingly cautious ahead of a string of earnings reports due later in the week.
Additional pressure factors
Other developments affecting the sector include:
- A Wall Street Journal report that Nvidia could provide around $250 billion in financial backstop for an OpenAI data-centre project
- Nvidia shares falling nearly 5% as investors question the extent to which the AI chip leader may be financing its own customers
- Concerns that growing popularity of low-cost Chinese open-source AI models like Kimi K3 could mean future AI workloads prove less intensive than expected
CXMT listing
Chinese memory-chip maker CXMT’s strong stock-market debut added to concerns about intensifying competition in the global memory industry. The company could emerge as a more formidable memory supplier, increasing the risk of oversupply and weaker pricing.
Additionally, reports that Apple had been lobbying the Trump administration to allow the use of Chinese-made chips in some of its products further unsettled investors already concerned about China’s growing technological capabilities.