(Oct 13): 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.
This year’s big Korean stock rally has sharply pared, as its reliance on the two chip giants has come back to bite. Record earnings from Samsung last week have failed to give the stock a boost, as investors worry that growth will slow.
The Kospi is now down a third from the record high it reached in June, and has fallen below its 200-day moving average. Foreigners have accelerated their exit, selling more than US$6 billion (RM24.5 billion) worth of Kospi shares on a net basis in October.
“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.”
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.
Broader worry over the sustainability of the AI boom continues to weigh on industry stocks at the same time. 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.”
Uploaded by Magessan Varatharaja