Concerns about Chinese competition and financing of the AI boom caused investors to dump chipmakers worldwide on Tuesday, sending global stocks to a one-month low. The prospect of a US interest rate hike as early as this week also soured the mood.
Asian chipmakers were at the center of Tuesday’s selloff; South Korea’s KOSPI fell more than 10% to a three-month low, setting off a circuit breaker en route to its biggest monthly slump ever, surpassing losses from the 1997 Asian financial crisis.
Due to investor concerns over stretched valuations and circular funding in the industry, AI-linked equities have experienced many bouts of selling in recent weeks following a fantastic gain this year. The most recent defeat followed a report that China had started producing homegrown immersion deep ultraviolet (DUV) lithography machines, and worries about heightened rivalry in the memory chip market were heightened by Chinese chipmaker CXMT’s impressive stock-market debut on Monday. You’ve seen hyperscalers companies that pay for AI—not really getting involved due to worries about the expense and level of leverage required. And now there are concerns about the semiconductor industry’s profitability, especially in Asia,” stated Dorian Carrell, Schroders’ head of multi-asset income.
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