A downturn in global chipmakers intensified as fears surrounding the AI boom's sustainability grew. South Korea's Kospi led Asian declines, with investors selling off shares in major memory-chip producers. This pullback appears to be an unwind of a crowded trade, raising concerns about big-tech capital expenditure, debt, and Chinese competition.

Reports suggest a single story about China's mass production of lithography machines, and the IPO of CXMT, contributed to the decline. However, the primary concern is demand destruction. Industry optimism is waning as only hyperscalers and AI infrastructure providers seem willing to pay high prices for memory. This could signal a plateau in chip prices sooner than anticipated, necessitating significant downward revisions to revenue forecasts.

Analysts at Jefferies note that consumer electronics companies struggled to pass on recent memory price increases. With weak gadget demand, expectations for further price hikes in DRAM and NAND are likely overly optimistic. The projected $800bn revenue for the top five memory-chip makers this year is considered achievable, with AI buyers accounting for $320bn. However, future projections, particularly for 2027, appear increasingly challenging, with consensus forecasts suggesting unsustainable growth rates and high de-rating risks.