Samuel Boivin | Nurphoto | Getty Images
Chip stocks extended their sell-off on Tuesday as investors weighed concerns about artificial intelligence financing and growing competition across the semiconductor industry.
Memory-chip maker Micron fell about 5%. Other memory-related companies, including SanDisk, Seagate and Western Digital, also moved sharply lower. SanDisk declined 5%, while Seagate and Western Digital each dropped 6%.
The losses followed Wall Street’s retreat on Monday and came as investors focused on rising competition from China’s ChangXin Memory Technologies, known as CXMT.
Over the weekend, CXMT said it had made significant progress on a new chip architecture intended to boost memory density by storing more data in a smaller physical area.
CXMT is China’s main competitor to Micron and South Korean memory giants SK Hynix and Samsung Electronics. Analysts generally consider the Chinese company to be behind its U.S. and South Korean rivals, making its latest progress a potential source of additional pressure on the established market leaders.
“Investors are jittery and searching for reasons to lock in gains from AI-related stocks that have outperformed this year, particularly memory companies,” said Vey-Sern Ling, senior equity adviser at UBP.
“In reality, Chinese memory manufacturers could eventually threaten the global supply-demand balance, but in the near term they still face technological obstacles, especially in more advanced memory such as HBM,” Ling told CNBC by email.
CXMT shares ended 2.8% lower in Shanghai.
Micron, Seagate, SanDisk, Western Digital stock chart.
‘Vulnerable’ AI sentiment?
Phillip Wool, chief market strategist at Rayliant Global Advisors, said CXMT’s breakthrough was an important achievement for Chinese chipmakers. It showed that the company could overcome technology restrictions and might challenge established competitors sooner than previously anticipated.
However, Wool said the market’s response appeared excessive relative to the immediate competitive risk. CXMT has not yet proven it can manufacture at scale and remains behind Samsung and SK Hynix in market share.
“More importantly, this is not even about HBM, where the Korean chipmakers remain unquestionably dominant. They face very little threat from CXMT or any other competitor for the foreseeable future,” Wool said.
In his view, the steep decline reflected broader unease surrounding the AI trade rather than a fundamental change in the semiconductor competitive landscape.
“I see it more as evidence of how fragile AI sentiment is right now,” Wool said. He added that volatility could continue as investors reassess chip demand and question how long semiconductor manufacturers can maintain their pricing power.
The chief executives of Intel and Broadcom have cautioned that access to capital could become a significant obstacle for the AI boom, even as demand for computing infrastructure remains greater than available supply.
Investors are also preparing for a busy week of corporate earnings and U.S. inflation figures. The data could offer new insight into the interest-rate outlook, which often moves inversely to growth stocks.
Global tech stocks slump
The sell-off gained further momentum after a post from Tesla and SpaceX chief Elon Musk. He said China has the capacity to scale production once it determines how to manufacture a product.
“When China figures out how to manufacture a product, their ability to scale is often greater than the rest of the world combined,” Musk wrote on Monday.
European semiconductor stocks also fell in early trading. Semiconductor equipment maker ASML dropped 3.3%, while STMicroelectronics and German chipmaker Infineon each lost 5%. Dutch companies BE Semiconductor and ASM International were each down about 4% at the open.
Shares of South Korean chip giant SK Hynix, a leading supplier of high-bandwidth memory chips used in artificial intelligence applications, plunged more than 10%, while rival Samsung Electronics shed 7.4% — both hitting their lowest levels since August. SK Hynix’s U.S.-listed stock was down around 5% in premarket trading.
In Japan, shares of tech-focused investment giant SoftBank Group sank 8.5%. The group, which has significant exposure to the global AI industry through its huge investment in OpenAI, led a broader retreat in Japanese semiconductor and electronics shares.
Tokyo Electron, a major supplier of chipmaking equipment, dropped 7.2%, while Advantest, which makes semiconductor testing equipment, declined 2.9%. Other Japanese technology stocks also came under pressure. Lasertec fell over 5%, Disco lost 4.7% and Renesas Electronics shed 5.9%.
The declines followed a weak session for technology stocks on Wall Street, where the Nasdaq Composite dropped 0.44% on Monday. U.S. memory chipmaker Micron Technology slid 3.9% as
