A sell-off in chip stocks spread from Wall Street to Asia and Europe on Tuesday. Investors weighed worries over AI financing and a progress report from China's CXMT. SK Hynix fell more than 10% and SoftBank sank 8.5%.
Technology stocks fell Tuesday, extending a sell-off sparked by worries over artificial intelligence financing and intensifying competition. Micron was down around 3% in U.S. premarket trading, while SanDisk, Seagate and Western Digital were all around 3% lower.
The slide followed declines on Wall Street on Monday, when the Nasdaq Composite dropped 0.44% and Micron slid 3.9%.
China's CXMT puts memory leaders under pressure
Over the weekend, China's ChangXin Memory Technologies announced significant progress on a new chip architecture designed to pack more data into a smaller space. Analysts broadly see CXMT as trailing Micron, SK Hynix and Samsung Electronics, so any advance could add competition for those leaders.
Elon Musk added to the pressure with a post on Monday saying China's ability to scale a product is often greater than the rest of the world combined once it figures out how to make it.
UBP's Vey-Sern Ling pointed to profit-taking. According to CNBC: "Investors are jittery and looking for excuses to take profit on AI-related stocks" that outperformed this year.
Asian and European chip names slide
In Asia, SK Hynix plunged more than 10% and Samsung Electronics shed 7.4%, both hitting their lowest levels since August. SoftBank Group, which has significant exposure to the AI industry through its investment in OpenAI, sank 8.5%. Tokyo Electron dropped 7.2% and Advantest declined 2.9%.
European shares followed. ASML was down 3.3% in early trade, STMicroelectronics and Infineon were both down 5%, and BE Semiconductor and ASM International were both around 4% lower at the open.
A Rayliant strategist sees anxiety over AI, not a competitive shift
Phillip Wool of Rayliant Global Advisors said the market reaction appeared disproportionate to the immediate threat, since CXMT has yet to demonstrate large-scale production. He read the sell-off as a sign of how vulnerable AI sentiment is, and warned that volatility could persist.
The chief executives of Intel and Broadcom have warned that access to capital could emerge as a major headwind to the AI boom. Investors also face a busy week of corporate earnings and U.S. inflation data.
Source: CNBC
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