- AI sell-off intensifies as investors ditch chip stocks, leading to significant declines in major semiconductor companies.
- Chip stocks have slid sharply in both the US and Asia, with the South Korean Kospi index falling to its lowest point since mid-April.
- Samsung Electronics and SK Hynix both experienced declines of more than 10%, contributing to a significant drop in South Korea's stock market.
- Investors are increasingly concerned about the huge borrowing among AI companies to fund their datacentre expansion plans.
- China's competition is a major factor in the sell-off, as the country has begun mass production of homegrown deep ultraviolet (DUV) chip-making tools.
- Nvidia shares fell by 5%, resulting in the company losing its position as the world's most valuable listed company to Apple.
- Market reaction to the Nvidia news was swift, with shares closing below the $200-per-share mark.
- Trading on South Korea's benchmark Kospi index was temporarily paused after sliding by 8%, closing 10.8% lower.
- Apple has overtaken Nvidia as the world's most valuable company after a significant rise in its shares this year.
- Concerns about the amount of money being poured into AI development are growing, alongside increasing competition from China.
The sell-off in AI stocks has intensified, leading to significant declines in major chip manufacturers. Samsung and SK Hynix both fell by more than 10%, contributing to a drop in South Korea's Kospi index to its lowest level in three months.3
Analysts have linked this downturn to renewed fears over AI investment spending and increased competition from Chinese companies, particularly after China began mass production of its own deep ultraviolet (DUV) chip-making tools.
The market reaction was swift, with trading on the Kospi index temporarily halted after it slid by 8%. Following the halt, it closed 10.8% lower, marking a significant downturn for the tech-heavy index, which had previously more than doubled in value from January to June but has since lost around a third of its value.8910
Jun Bei Liu, founder of investment firm Ten Cap, expressed concerns about the massive borrowing among AI companies to fund their datacentre expansions, which has raised alarms among investors.412
The sell-off was exacerbated by the decline of Nvidia, which fell 5% in New York, losing its position as the world's most valuable listed company to Apple. This shift highlights the volatility in the tech sector, as Apple's stock rose by about 25% this year.6711
As the competition heats up, the future of AI investment remains uncertain, with analysts closely monitoring the developments in both South Korea and China.
“The South Korean Kospi index dropped to its lowest level in three months, closing 10.8% lower after trading was paused due to panic selling. Analysts are concerned about the impact of rising competition from Chinese chip makers, particularly after CXMT's shares surged 466% upon its market debut.”
The Guardian
