- AI sell-off intensifies, driving South Korea’s stock market down to its lowest level in three months.
- Investors continued to ditch chip stocks on Tuesday, amid rising concerns about the huge amount of borrowing among AI companies to fund their datacentre expansion plans.
- Analysts attributed the sell-off to renewed worries over AI investment spending, and competition from cheaper Chinese companies.
- China has begun mass production of homegrown deep ultraviolet (DUV) chip-making tools.
- Shares in the Chinese memory chip maker CXMT rose by 466% when it floated on the Shanghai stock exchange.
- The Wall Street Journal reported that was in discussions with OpenAI about providing $250bn (£188bn) for a massive datacentre project in Ohio.
- The market reaction to the Nvidia news was swift, with Nvidia falling 5% and closing the session below the $200-per-share mark.
- Nvidia’s five-year CDS spiked, suggesting that it may not yet be the right time to buy the dip.
South Korean semiconductor stocks are facing a significant sell-off, with Samsung and SK Hynix both dropping over 10%. This decline is attributed to investor concerns regarding AI investment and competition from China, leading to the Kospi index hitting its lowest point in three months.4
The sell-off has intensified as investors react to the huge borrowing by AI companies for datacentre expansions. Analysts have noted that the competition from cheaper Chinese firms is also a significant factor. For instance, China has commenced mass production of homegrown deep ultraviolet (DUV) chip-making tools, which poses a direct threat to South Korean manufacturers.
In addition, shares of the Chinese memory chip maker CXMT surged by 466% upon its debut on the Shanghai stock exchange, highlighting the competitive landscape. The Wall Street Journal reported that Nvidia's stock fell 5% after discussions about a $250 billion datacentre project with OpenAI, further indicating the volatility in the tech sector. Nvidia’s five-year CDS spiked, suggesting that it may not be the right time to buy the dip.67
Overall, the combination of AI investment concerns and Chinese competition is reshaping the landscape for South Korean chip stocks, prompting a reevaluation of their market positions.
“Investors are increasingly worried about the significant borrowing by AI companies for datacentre expansions, contributing to the sell-off. Meanwhile, China has begun mass production of homegrown deep ultraviolet chip-making tools, further intensifying competition in the semiconductor market.”
The Guardian
