Micron Stocks, SK Hynix, Samsung Electronics, ASML: Tech Stocks Fall

Technology stocks fell Tuesday, extending a selloff sparked by concerns over funding for artificial intelligence and intensifying competition.

Memory chip giant Micron was down about 3% in U.S. premarket trading, with other names like Broadcom under pressure.

Other memory-related actions such as SanDisk, Seagate And Western digital were all lower by about 3%.

This drop, which follows Wall Street’s decline on Monday, comes as investors assess intensifying competition from China’s ChangXin Memory Technologies, or CXMT.

Over the weekend, CXMT announced significant progress in the development of a new chip architecture, designed to increase memory density by packing more data into a smaller space.

CXMT is the main Chinese rival to Micron and South Korean heavyweights SK Hynix and Samsung Electronics. Analysts generally view CXMT as lagging behind U.S. and South Korean memory leaders, meaning any moves by the Chinese company could add more competition to the market leaders.

“Investors are nervous and looking for excuses to take profits on AI-related stocks that have outperformed this year, especially memory stocks,” said Vey-Sern Ling, senior equity advisor at UBP.

“In reality, while Chinese memory makers have the potential to become a threat to the global supply-demand balance over time, in the short term they continue to face technological hurdles, especially for more advanced memory like HBM,” Ling told CNBC via email.

CXMT shares closed 2.8% lower in Shanghai.

Add fuel to sale was an article of Tesla And EspaceX Boss Elon Musk, who said China had the capacity to increase production once it figured out how to make something.

“When China succeeds in making a product, its ability to scale is often greater than the rest of the world combined,” Musk said Monday.

European chip stocks also fell early in the morning, along with the semiconductor equipment maker. ASML down 3.3%, and STMicroelectronics and German chip manufacturer Infineon both down 5%. Dutch companies BE Semiconductor And ASM International were both down about 4% at the open.

Shares of South Korean chip giant SK Hynix, a leading supplier of high-bandwidth memory chips used in artificial intelligence applications, plunged more than 10%, while rival Samsung Electronics lost 7.4%, both hitting their lowest levels since August. SK Hynix’s U.S.-listed stock was down about 5% in premarket trading.

In Japan, shares of the tech-focused investment giant SoftBank Group sank 8.5%. The group, which enjoys significant exposure to the global AI industry through its huge investment in OpenAI, has led a broader pullback from Japanese semiconductor and electronics stocks.

Tokyo Electrona major supplier of chip manufacturing equipment, fell 7.2%, while Avantestwhich makes semiconductor test equipment, fell 2.9%. Other Japanese tech stocks have also been under pressure. Lasertec fell by more than 5%, Disco lost 4.7% and Renesas Electronics lost 5.9%.

These declines follow a session of weakness for technology stocks on Wall Street, where the Nasdaq Composite fell 0.44% on Monday. American memory chip manufacturer Micron technology slipped 3.9% while

Phillip Wool, chief market strategist at Rayliant Global Advisors, said CXMT’s breakthrough marked an important milestone for Chinese chipmakers, demonstrating their ability to overcome technological restrictions and potentially challenge established players sooner than expected.

But he warned that the market reaction seemed disproportionate to the immediate competitive threat, given that CXMT has yet to demonstrate large-scale production and continues to lag behind Samsung and SK Hynix in market share.

“More importantly, we’re not even talking about HBM here, and Korean chipmakers still unquestionably dominate this space, with very little threat from CXMT or anyone else for the foreseeable future,” Wool said.

He said the sharp decline reflected broader concern about the AI ​​business rather than a fundamental change in the competitive landscape.

“I read this more as a sign of how vulnerable AI sentiment is right now,” Wool said, warning that volatility could persist as investors reassess chip demand and how long semiconductor makers can maintain their pricing power.

Executives from Intel and Broadcom have warned that access to capital could pose a major barrier to the AI ​​boom, even as demand for IT infrastructure continues to outstrip supply.

Investors also expect a busy week of corporate earnings and U.S. inflation data, which could provide new clues about the outlook for interest rates that often have an inverse correlation with growth stocks.