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The global sell-off in semiconductor stocks intensified on Tuesday, following advances claimed by China’s CXMT and comments from Broadcom’s chief executive on the casino nature of AI investments.
Shares of Samsung Electronics and SK Hynix, the world’s two largest memory chip makers, fell 8.8 percent and 9.4 percent respectively in morning trading in Seoul, dragging South Korea’s main stock index down 7 percent.
The two companies represent about half of the benchmark Kospi and have lost almost 15 percent over the past five days.
The Kospi was the world’s worst-performing stock market in the third quarter, having more than tripled between the start of 2025 and its peak in mid-July.
Taiex, the Taiwanese chipmaker, fell 2.5 percent, while chipmaker TSMC fell 1.8 percent.
Nasdaq 100 futures were down 0.5 percent Tuesday, while S&P 500 futures were down just 0.1 percent.
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The declines follow Wall Street’s losses on Monday, with U.S. chipmaker Micron Technology falling nearly 4 percent, while the Philadelphia Stock Exchange’s semiconductor index fell 2.7 percent.
Concerns about the sector have been fueled by Broadcom boss Hock Tan’s warning about the gaming characteristics of AI commerce.
“A lot of investors have no idea what they are investing in,” the boss of the American chip maker said Monday at an event in Singapore, in comments reported by Bloomberg. They “have very extreme expectations and find that it’s almost like they’re in a casino,” he added.
Ecaterina Bigos, senior market strategist at BNP Paribas Asset Management, said the combination of higher bond yields and growing investor concerns about AI investment returns was driving the selling. “Investors are starting to wonder how profits are going to be generated,” she said.
There are signs that the selloff is part of a broader reassessment of AI by investors.
Shares of SoftBank Group, which holds a more than 10 percent stake in ChatGPT maker OpenAI, fell nearly 8 percent in Tokyo, with Japan’s Nikkei 225 falling 2.7 percent.
Frank Benzimra, head of Asian equity strategy at Société Générale, attributed the Kospi and Nikkei falls to flash memory fears: “Increasing competition from China is becoming an additional obstacle for memory companies, on top of expectations of moderate growth in memory chip prices. »
Investors were also concerned about a report that Chinese DRam producer CXMT was moving forward with a new memory architecture that SK Hynix and Samsung were also developing.
Hao Hong, chief investment officer of hedge fund Lotus Asset Management, highlighted the selling of Korean stocks by foreign investors, as well as the nightly selling of American memory and CXMT’s new technology. Foreign investors have sold more than $150 billion worth of South Korean stocks this year.
In China, the CSI 300 and Hang Seng indices fell 0.4 percent and 0.3 percent, respectively. The chip-heavy Star 50 index fell 0.5 percent after falling as much as 3.8 percent. CXMT fell 0.5 percent, after paring its losses.
Investor concerns about the sustainability of AI spending and the profitability of chipmakers beyond this year have continued despite record profits from Samsung, which last week estimated its operating profit rose nearly nine-fold in the third quarter amid a persistent supply shortage.
“Investors remain very cautious about (chipmakers) and these profits haven’t changed that,” said Dec Mullarkey, head of investment strategy and asset allocation at SLC Management.
“Chip investors have long memories of its painful boom-bust cycles,” he added. “Therefore, (they) continue to be skeptical about the sustainability of outsized profits.”
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