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South Korean semiconductor stocks tumbled on Tuesday, with Samsung Electronics falling as much as 9.5 per cent and SK Hynix plunging 11.1 per cent, as investors dumped artificial intelligence (AI)-linked shares amid mounting concerns over AI infrastructure spending, growing competition from China and fresh doubts over the sustainability of the sector’s multi-year rally.
The sharp selloff dragged the benchmark KOSPI index down around 8 per cent in early trade, underscoring the pressure on South Korea’s technology-heavy equity market.
SK Hynix, one of the world’s largest suppliers of high-bandwidth memory (HBM) chips used in Nvidia’s AI processors, has been among the biggest beneficiaries of the global AI boom. Its shares, however, have become especially vulnerable to shifts in investor sentiment surrounding AI spending.
The rout followed a weak overnight session on Wall Street, where SK Hynix’s US-listed shares closed at $143.02, below their $149 initial public offering price. Nvidia shares also fell nearly 5 per cent after a Wall Street Journal report said the AI chipmaker could provide a financial backstop of about $250 billion for an OpenAI-backed data-centre project.
The report fuelled investor concerns that Nvidia may increasingly need to support the financing of its customers’ large AI infrastructure investments, raising questions over the long-term economics of the AI ecosystem.
Analysts said the latest selloff reflects a combination of factors rather than a single trigger, including concerns over AI infrastructure financing, rising competition from Chinese chipmakers and investor caution ahead of key corporate earnings later this week.
Han Ji-young, an analyst at Kiwoom Securities, said reports that Chinese companies were developing domestic deep ultraviolet (DUV) lithography equipment had reignited fears that China’s memory-chip industry could accelerate capacity expansion, intensifying competition in the global semiconductor market.
Although details about the companies involved, the technology’s capabilities and commercialisation timeline remain limited, the reports have weakened investor confidence at a time when enthusiasm for AI-related semiconductor stocks is already fading, he said.
Han also noted that investors were becoming increasingly cautious ahead of a series of earnings reports from major technology companies.
“Despite stronger-than-expected earnings from Samsung Electronics earlier this month and Alphabet last week, semiconductor shares experienced sharp declines after the results,” he said, suggesting investors are increasingly focused on future growth rather than recent earnings.
Investor sentiment has also been hit by the rapid rise of low-cost Chinese open-source AI models such as Kimi K3, which have raised questions about whether future AI applications will require less computing power than previously expected. If AI models become more efficient, demand for expensive AI accelerators and HBM chips could moderate over time.
Adding to the pressure, the blockbuster stock market debut of Chinese memory-chip maker CXMT reinforced concerns that Chinese manufacturers are rapidly closing the technology gap with established South Korean rivals.
Market sentiment was further unsettled by reports that Apple had lobbied the Trump administration to permit the use of Chinese-made chips in some of its products, highlighting China’s growing role in the global semiconductor supply chain.
The latest selloff marks a sharp reversal for South Korea’s semiconductor sector, which has led the country’s stock market gains over the past two years on expectations that surging AI investment would fuel sustained demand for advanced memory chips. Tuesday’s declines suggest investors are beginning to question whether the AI spending boom can continue at the same pace as financing risks rise and Chinese competition intensifies.
With inputs from agencies.
