Korean chip stocks extended their selloff on Tuesday, dropping over 5% each and heading for a fifth straight session of losses. Samsung Electronics and SK Hynix led the decline as concerns about Chinese rivals and the stretched AI stock rally intensified. The Kospi benchmark fell as much as 4.8% amid the downturn.
US chipmakers also slumped, with Micron Technology retreating 3.9%. Investors reacted to a report that China's CXMT Corp. has made progress on a new memory architecture. Comments from Broadcom Inc.'s chief executive about the gambling-like qualities of AI stock investment further fueled worry.
Ha Seok Keun of Eugene Asset Management noted uncertainty over whether the upcycle can last into 2028 is weighing on valuations. This year's Korean stock rally has sharply pared due to reliance on two chip giants. Record earnings from Samsung last week failed to boost the stock, as investors worry growth will slow.
The Kospi is now down a third from its June record high and below its 200-day moving average. Foreigners sold over $6 billion of Kospi shares in October. Jung In Yun of Fibonacci Asset Management Global stated Samsung's strong earnings are overshadowed by competition concerns from CXMT and AI spending sustainability.
CXMT still needs to translate progress into commercially competitive production at scale.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing