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Chip stocks slide as AI spending fears spread
Chip stocks plunged across Asia after Nvidia fell 5%, while South Korea’s Kospi closed down 10.8% amid concerns over AI spending.
Image: Hacker News
Shares in major chip companies fell sharply across the US and Asia as investor unease over artificial-intelligence spending intensified. South Korea’s benchmark Kospi index briefly triggered a circuit breaker on Tuesday after dropping 8%, then slid further once trading resumed after the 20-minute halt. It closed 10.8% lower.
Technology stocks led the decline. Samsung Electronics and SK Hynix each fell by more than 13%, while Japan’s tech-heavy Nikkei 225 ended almost 4% lower.
The sell-off followed a 5% drop in Nvidia shares in New York on Monday. That decline allowed Apple to retake the position of the world’s most valuable listed company. Apple’s shares have risen about 25% this year.
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Why AI spending is unsettling investors
The Kospi had more than doubled from the start of the year to mid-June, but has since lost around a third of its value. The index has also been halted multiple times this year by circuit breakers, a mechanism designed to slow panic selling.
Jane Sydenham, investment director at Rathbones, said Asian markets were coming off “phenomenal rises.” She described South Korea’s market as especially concentrated in Samsung and SK Hynix, adding that many Korean investors buy shares with debt, which can amplify a correction.
Sydenham said the latest trigger was Nvidia’s fall after the Wall Street Journal reported that the chipmaker was in talks to provide around $250bn to OpenAI for a major data-center project. The BBC contacted Nvidia and OpenAI for comment; the source did not report a response.
“Is it going to earn a proper return in the future? That’s what investors are worried about.”
Cheng Chye Hsern of wealth manager Providend said Apple was appealing because it is one of the few major technology companies “not taking part in the AI race,” potentially making it more attractive to investors concerned about rivals' billions in data-center spending.
Jun Bei Liu, founder of Ten Cap, also pointed to rising competition from China. She said investors were “taking some profit off the table” but were likely to reinvest in the stocks after the US holiday season.
CXMT surges on Shanghai debut
China’s largest memory-chip maker, ChangXin Memory Technologies (CXMT), moved in the opposite direction. Its shares jumped nearly 470% during their Shanghai debut on Monday.
CXMT said it plans to use most of its IPO proceeds to increase production and fund research and development. The company makes dynamic random-access memory (DRAM) chips used in AI data centers, smartphones, PCs, tablets and other devices.
European markets were less affected when trading opened Tuesday. The UK’s FTSE 100, France’s CAC 40 and Germany’s DAX 40 were each up around 0.6% a couple of hours into trading, reflecting their relatively lower exposure to AI companies.
Enterprise Editor
Marcus follows the money. He covers enterprise software, cloud architecture, and the tectonic shifts in Big Tech strategy. He translates dense earnings calls and complex M&A activity into actionable insights about where the industry is actually heading. If a tech giant makes a silent pivot, Marcus is usually the first to notice.
via Hacker News
