AI financing fears trigger sweeping sell-off in global chip stocks – PRESS Insider

Asian semiconductor shares suffered another sharp sell-off on Tuesday, 28 July, as investors cut exposure to companies that had benefited most from the artificial-intelligence spending boom.

South Korea’s Kospi dropped 10.8%, its largest one-day decline since the early stages of the US-Iran conflict in March. Samsung Electronics fell 13.4%, its worst session in almost two decades, while SK Hynix lost 14.7%.

The two chipmakers together account for nearly half of the Kospi’s weighting, magnifying the decline in the broader market.

Japan’s Kioxia Holdings dropped 18.3%, Taiwanese chip designer MediaTek fell almost 10% and the Nikkei declined about 4%. ASML shares fell in European trading, while Nvidia and Micron Technology weakened in US premarket transactions.

The latest losses extended a retreat that had already pushed the Philadelphia Semiconductor Index about 20% below its 22 June record by mid-July.

SK Hynix’s US-listed shares closed 7.5% lower at $143.02 on Monday, falling below their $149 offer price for the first time since the memory-chip producer’s Nasdaq listing earlier this month. The company, a major supplier of high-bandwidth memory to Nvidia, is scheduled to report results on Wednesday.

The selling reflected several overlapping concerns rather than a single change in the industry’s earnings outlook.

Investors have become more cautious about the debt and financing arrangements supporting large AI data-center projects. Nvidia shares fell nearly 5% on Monday after The Wall Street Journal reported that the company could provide a financial backstop of about $250 billion for an OpenAI data-center development.

The report prompted questions about how much of the demand for Nvidia’s chips could depend on financial support from the chipmaker itself. Neither a final agreement nor a commitment of that size has been announced.

Fresh concern about Chinese competition added to the pressure. Reports that Chinese companies were developing domestic deep-ultraviolet lithography equipment raised the possibility that local memory manufacturers could add capacity more quickly than expected.

Details about the equipment’s performance, manufacturers and commercialization timetable have not been disclosed. Analysts therefore cautioned against treating the reports as evidence that Chinese suppliers had already closed the technology gap with established manufacturers.

Chinese memory producer CXMT’s stock-market debut nevertheless reinforced the shift in sentiment. Its shares surged 466% in Shanghai on Monday after an $8.6 billion initial public offering, making the company China’s largest listed group by market value at the close.

CXMT competes mainly in commodity dynamic random-access memory, or DRAM. Cameron Systermans, head of multi-asset for Asia at Mercer Investments, told Reuters that the company remained “likely years behind” its South Korean rivals in high-bandwidth memory, the more advanced chips used in AI accelerators.

Lower-cost Chinese AI models are also complicating estimates of future chip demand. Models such as Moonshot AI’s Kimi K3 have revived debate over whether more efficient software could reduce the computing power needed for some workloads.

That concern follows strong increases in semiconductor production and capital spending. Samsung reported better-than-expected earnings earlier in July, but its shares fell after the results as investors focused on future supply and pricing. Taiwan Semiconductor Manufacturing Co. also exceeded quarterly expectations but raised its planned capital expenditure.

Meanwhile, the Monetary Authority of Singapore said on Tuesday that an abrupt reversal in AI investment could have consequences beyond technology shares.

“If there is a major retrenchment in AI investment, it could sharply weaken global growth through a fall in business investment and semiconductor demand and negative wealth effects,” MAS Managing Director Chia Der Jiun said at the release of the central bank’s annual report. “A sharp tightening of global financial conditions could result.”

AI-related electronics have accounted for more than 70% of Asia’s export growth so far in 2026, up from 46% in 2024, according to MAS. That concentration leaves semiconductor-exporting economies particularly exposed to a pullback.

Chia said AI demand was still likely to provide a meaningful near-term lift to the global economy. The durability of the investment cycle, however, would increasingly depend on companies generating commercial revenue and demonstrating productivity gains sufficient to justify their financing costs.

The central bank also warned that AI and advances in quantum computing were increasing cybersecurity risks for financial institutions. MAS and the Association of Banks in Singapore have formed a task force to develop defenses against AI-enabled cyberattacks.