Asian semiconductor stocks witnessed a sharp selloff on Tuesday, with South Korea leading the regional decline as investors grew concerned about AI infrastructure spending, rising competition from China, and stretched valuations across the chip sector.
Shares of Samsung Electronics and SK Hynix fell by as much as 13.4% and 14%, respectively, dragging South Korea’s KOSPI index down about 9.4%. In Japan, memory-chip maker Kioxia Holdings dropped nearly 18%, while Taiwan’s MediaTek declined more than 9% during morning trading.
The decline followed weakness in U.S. markets, where SK Hynix’s American-listed shares fell 7.5%, closing below their $149 initial public offering price for the first time since listing. The company has been one of the biggest beneficiaries of the AI boom due to its role as a key supplier of high-bandwidth memory (HBM) chips to Nvidia.
Analysts said investor sentiment weakened due to several factors, including uncertainty around AI infrastructure financing and concerns over China’s rapid progress in semiconductor technology. Reports suggesting that Chinese companies are developing domestic deep ultraviolet (DUV) lithography equipment have raised expectations that Chinese memory-chip manufacturers could expand production and intensify global competition.
Adding to the cautious mood, investors are awaiting a series of corporate earnings reports later this week. Analysts noted that even stronger-than-expected earnings from Samsung Electronics and Alphabet failed to lift semiconductor stocks, reflecting broader concerns about the sector.
Market sentiment was also affected by a Wall Street Journal report stating that Nvidia could provide a $250 billion financial backstop for an OpenAI data centre project. The report raised questions about whether the AI chip giant may be financing its own customers, sending Nvidia shares down nearly 5%.
Meanwhile, the growing popularity of low-cost Chinese open-source AI models such as Kimi K3 has fuelled speculation that future AI workloads may require less computing power, potentially reducing demand for advanced AI chips and HBM. The successful stock market debut of Chinese memory-chip maker CXMT further strengthened concerns about increasing competition, possible oversupply, and pressure on global memory-chip pricing.
Investor sentiment was further impacted by reports that Apple had been lobbying the Trump administration to allow the use of Chinese-made chips in some of its products, highlighting China’s expanding role in the global semiconductor industry.
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