Semiconductor shares declined on Tuesday after Broadcom’s chief executive questioned AI investors’ understanding and China’s CXMT reported advances in chip design, according to market reports.
South Korea’s Kospi dropped 6.25% as traders sold chip equities, market data showed. Other Asian markets also moved lower.
Japan’s Nikkei declined 1.8%, while Taiwan’s exchange shed nearly 2% and TSMC fell by about the same margin, figures indicated.
Samsung Electronics lost 7.4% in South Korea, while SK Hynix dropped 10%, exchange data indicated.
In Japan, Tokyo Electron, which supplies chip-making equipment, retreated 7.15%, and SoftBank Group, which backs OpenAI, gave up 8.5%, according to market data.
US futures signalled a mixed Wall Street open after the Nasdaq composite eased 0.4% on Monday, market data showed. Micron Technology declined 3.9% and Nvidia, Advanced Micro Devices and Broadcom also moved lower.
Crude prices also eased amid rising Middle East tensions, reports indicated.
AI-related equities have swung sharply in recent months on concern that firms are funding vast infrastructure spending with debt, analysts have noted.
The latest downturn followed a South China Morning Post report on Monday that CXMT had advanced a new DRAM design to raise memory density. Investors said the development raised concern it might rival Samsung, SK Hynix and Micron, the three largest memory producers.
CXMT, which listed in Shanghai in late July to a strong reception, produces DRAM chips that hold data used in calculations by other AI processors, company information shows.
IG chief market analyst Chris Beauchamp said the sell-off looked likely to persist because of fresh news from China.
Beauchamp said CXMT’s progress highlighted intense sector competition, which he said benefited buyers through rapid innovation and lower margins but threatened high-valued tech shares underpinning the broader rally, according to IG.
Broadcom chief executive Hock Tan told a Singapore conference that the AI boom had drawn in backers lacking real understanding of their bets, Bloomberg reported.
Tan said many investors had no idea what they backed and set extreme expectations before discovering the experience resembled a casino, according to Bloomberg’s account of the event.
OpenAI, the developer of ChatGPT, remains unprofitable, and Tan said its $50bn (£38bn) annualised revenue at end-September pointed to a workable model without assuring future profit, Bloomberg reported.
Tan said the company continued to lose money due to heavy training expenditure, adding that the figure only demonstrated potential growth from advanced generative models, according to the same report.
He added that much enterprise income for AI labs derived from trial projects, comparing the pattern to a child using $10 of arcade tokens in 10 minutes without learning, Bloomberg reported.
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