Chips stocks such as SanDisk, SK Hynix, Intel, Micron, AMD, Nvidia continued to slip before the opening bell on Tuesday, October 13 following China's memory push and doubts over AI linked spending.
Among these stocks, SK Hynix declined the most in premarket, falling 5.15% to $153.88, followed by Sandisk, down 3.81% at $1,430.65, Micron was trading 3.14% lower at 957.98. AMD dropped 1.18% to $587.25, while Nvidia shares slipped 0.90% to $224.29.
The continued pressure chipmakers came after China's memory chipmaker CXMT announced significant progress on a new, high-density chip structure, ramping up competitive pressure. Other factors include the wider selloff of South Korean AI stocks such as SK Hynix and Samsung Electronics. This comes amid rising concern regarding the return on investment from AI aftter massive infrastructure spending by companies in the sector.
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On Monday, Wall Street witnessed tech rout, with the tech-heavy Nasdaq Composite closing 0.44% lower. Sandisk Corp. slid 6% and Micron Technology declined 3.9%.
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The pressure was reflected on Asian market as well, with South Korea's Kospi fell 6.5% or nearly 400 points to 6,001.81, Japanese index Nikkei's return after a holiday on a negative footing as it slumped nearly 3% to a low of 5,988.22, Australia's S&P/ASX 200 was down 0.38% to 8,749.40, Hong Kong's Hang Seng Exchange opened 0.8% lower at 24,072.28. Semiconductor giants SK Hynix and Samsung Electronics Co. Ltd. declined 9% and 8% to 1,464,000 South Korean Won and 231,750 South Korean Won, respectively. SK Hynix's Chinese rival CXMT earlier announced that it made progress on a memory-chip design capable of storing more data.
On a broader context, the sector witnessed sell-off as worries continue about how long the AI trade can run. Investors are reassess whether the pace of investment in the technology can be sustained against a backdrop of mounting safety concerns and signs of funding strain. Providing a counterweight is optimism that strong earnings will continue to support the broader market.
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“Memory names are under pressure from a rise in Chinese competition and an increasing number of voices in the industry warning of a bubble,” Bank J Safra Sarasin's von Rotberg told Bloomberg. “The volatility in the tech trade makes a confirmation of hyperscaler capex guidance ever more important.”
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