A global slide in semiconductor stocks deepened, sending South Korea’s chip-heavy equity benchmark down 7% as concerns about AI overheating and Chinese competition intensified.
Samsung Electronics Co. and SK Hynix Inc. shares dropped more than 8% each Tuesday, weighing on the Kospi. A gauge of Chinese technology stocks tumbled 3.6% before paring its drop, while Japanese flash memory firm Kioxia Holdings Corp. shed more than 12%. US chipmakers slumped overnight.
Investor angst over the AI trade intensified after Broadcom Inc.’s chief executive likened market sentiment to a casino and warned that financing the buildout will become a key problem. That further undermined the case for AI stocks, just as higher interest rates begin to take a toll on massive debt-funded deals and threaten once-hot initial public offerings.
“Uncertainty over whether the upcycle can last into 2028 and beyond appears to be weighing on valuations and share prices” of Korean chipmakers, said Ha SeokKeun, chief investment officer at Eugene Asset Management.
Korean stocks took the biggest hit, as investors also reacted to a report that Chinese rival CXMT Corp. has made progress on a new memory architecture that Samsung and SK Hynix are also working on. The Seoul stock exchange briefly halted Kospi program trading for the first time since August.
The Kospi is now down a third from the record high it reached in June. The benchmark has fallen below its 200-day moving average. Foreigners have accelerated their exit, selling more than $6.3 billion worth of Kospi shares on a net basis in October.
CXMT plans to roll out a new server-memory product by the end of 2026 that enables higher storage density, according to a report from South China Morning Post on Monday. That resurfaced fears of rapid development by Chinese chipmakers that have rattled global rivals this year.
“Samsung’s strong earnings have been overshadowed by concerns about future competition from CXMT and the sustainability of AI spending,” said Jung In Yun, chief executive officer at Fibonacci Asset Management Global. “These concerns may weigh on sentiment, but CXMT still needs to translate technological progress into commercially competitive production at scale.”
Broader worry over the longevity of the AI boom continues to weigh on industry stocks after last week’s collapse of a planned offering by Nvidia Corp.-backed data center company Firmus Grid Ltd.
Broadcom CEO Hock Tan said financing may be a bigger problem than chip shortages. “A lot of investors have no clue what they are investing in,” the head of the American chipmaker said at an event in Singapore. They “set very extreme expectations only to find out that it’s almost like they are in a casino.”
This week’s earnings from ASML Holding NV and Taiwan Semiconductor Manufacturing Co. will help investors gauge how long bumper profit growth can last. Shares of TSMC, Asia’s most-valuable company, slipped as much as 2% Tuesday.
Record earnings from Samsung last week failed to give the stock a boost.
“Traders aren’t treating good news stories or lofty valuations as gospel any more, they’re digging much more carefully into the numbers and the underlying business case, with the whole AI trade still under the microscope,” said Tim Waterer, chief market analyst at KCM Trade.
This article was generated from an automated news agency feed without modifications to text.
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