- The Kospi closed 10.8% lower at 6,023.66 with trading halted intermittently; Samsung fell 13.4% and SK Hynix tumbled 14.7%.
- Chinese memory chipmaker CXMT surged 466% in its Shanghai debut Monday after Asia's biggest IPO this year, and reports emerged that China has begun mass production of homegrown deep ultraviolet (DUV) lithography tools.
- Beijing accused Washington of 'AI hegemonism' and threatened countermeasures over potential US probes, escalating tech tensions.
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The AI-driven bull market took its worst hit in months on Tuesday, as South Korea's Kospi index plunged 10.8% to 6,023.66 in a rout led by chipmakers. Samsung Electronics shares fell 13.4%; SK Hynix crashed 14.7%, dropping its US-listed shares below the $149 IPO price set earlier this month. Trading was halted at several points as circuit breakers tripped.
The trigger was a combination of AI-bubble anxiety and hard evidence that China is catching up on the chip stack. Chinese memory maker CXMT jumped 466% in its Shanghai debut Monday after raising at least $8.6 billion in Asia's biggest IPO of the year, valuing the company at $85.5 billion. A separate report from The Information indicated that Chinese firms have begun mass-producing domestic deep ultraviolet lithography equipment — the machines used to etch cutting-edge chips, and until now a near-monopoly of ASML and its US and Japanese peers.
Analysts framed the sell-off as a knee-jerk overreaction, but the underlying anxiety is real. Valuations of Nvidia, SK Hynix, Samsung, and TSMC have been driven to historic highs on the assumption that Western firms will monopolize the AI infrastructure buildout. Cheap, capable Chinese alternatives — in models, memory, and now equipment — undermine that thesis. Beijing did not help sentiment by publicly accusing Washington of 'AI hegemonism' and threatening countermeasures over potential US trade probes.
European shares steadied and US futures were mixed, suggesting the panic may not yet have fully crossed the Pacific. But the episode is a warning: the AI trade that has propped up global equity indexes for two years rests on assumptions about Chinese technological containment that are visibly breaking down.
Sources (4)
- Associated Press: South Korea's Kospi share index plunges 10% on selling of chipmaking stocks
- New York Times: Tech Stocks Tumble on Worries About A.I. Spending and China's Chip Competition
- Reuters: China memory chipmaker CXMT set for Shanghai debut after Asia's biggest IPO
- Yahoo News: China accuses US of 'AI hegemonism', threatens countermeasures over potential probes