- South Korea’s Kospi index plunged nearly 11% Tuesday on heavy selling of computer chipmaking stocks that have been battered recently by fears that the AI boom may turn out to be a bubble.
- On Monday, SK Hynix’s U.S.-traded shares fell to below the $149 initial public offering, or IPO, price for its closing at $143 a share.
- CXMT raised at least $8.6 billion in its IPO in Shanghai.
- A key factor driving the selling of AI-related shares is the expectation that rising competition from chipmakers might undermine gains for leading global companies whose shares have skyrocketed in the past months due to the AI frenzy.
- Analyst Jing Jie Yu of Morningstar stated, “We believe the market was likely spooked by the progress of China’s chipmaking equipment capabilities, and was worried that this progress would threaten the competitive position of global chipmaking and chip equipment leaders.”
South Korea's Kospi index experienced a significant drop of nearly 11% on Tuesday, primarily driven by a massive sell-off in the chip sector. This decline was largely attributed to fears that the ongoing AI boom could be a bubble, leading to heavy selling of major chipmakers.
Shares of Samsung Electronics plummeted by 13.4%, while SK Hynix saw a staggering 14.7% drop. The sell-off was exacerbated by reports indicating that China has commenced mass production of homegrown deep ultraviolet (DUV) chipmaking tools, raising concerns about increased competition in the global market.2
Analysts, including Jing Jie Yu from Morningstar, noted, “We believe the market was likely spooked by the progress of China’s chipmaking equipment capabilities, and was worried that this progress would threaten the competitive position of global chipmaking and chip equipment leaders.”5
The situation was further complicated by SK Hynix’s U.S.-traded shares falling below their $149 initial public offering price, closing at $143 per share. The overall sentiment in the market reflects a growing apprehension regarding the sustainability of gains made by leading global chipmakers amid rising competition.
“On Monday, SK Hynix’s shares closed at $143, below its $149 IPO price, reflecting investor concerns. Analyst Jing Jie Yu of Morningstar noted that the market is worried about China's advancing chipmaking capabilities threatening global leaders in the sector.”
Boston Herald
