Chip stocks slide in US and Asia as AI jitters rattle investors

Shares in major chip firms have fallen sharply in the US and Asia as a sell-off in artificial intelligence-related stocks deepened.

Trading on South Korea’s benchmark Kospi index was paused temporarily on Tuesday morning after sliding by 8%. It fell further after the 20-minute halt was lifted, closing 10.8% lower.

The slump was led by technology firms, with Samsung Electronics and SK Hynix both falling by more than 13%.

It comes after AI chip giant Nvidia fell by 5% in New York on Monday, meaning it lost its position as the world’s most valuable listed company to Apple.

The tech-heavy Kospi has been halted multiple times so far this year under a stock market mechanism known as a circuit breaker, which is designed to calm panic selling.

The index had more than doubled from the start of the year to mid-June but has since lost around a third of its value.

In recent months, stock market trading has been particularly volatile in South Korea as it has attracted large numbers of retail investors.

On Monday, US-listed shares in SK Hynix fell by 7.5% to well below the $149 (£112.11) offer price when it made a record-breaking debut on the Nasdaq on 9 July.

Japan’s Nikkei 225, which is also dominated by tech companies, closed almost 4% lower.

Nvidia shares fell on Monday after the Wall Street Journal reported that it is in talks to provide around $250bn for OpenAI as part of a massive data-centre project.

The BBC has contacted Nvidia and OpenAI for comment.

The decline allowed Apple to overtake Nvidia as the world’s most valuable company after the iPhone maker rose by about 25% this year.

Jun Bei Liu, the founder of investment firm Ten Cap, told the BBC that there are concerns about the amount of money being poured into AI development as well as increasing competition from China.

Against that backdrop, investors are “taking some profit off the table” but are likely to reinvest in these stocks after the US holiday season, she said.

Shares in China’s biggest memory chip maker, ChangXin Memory Technologies (CXMT), soared by nearly 470% as they made their debut in Shanghai on Monday.

The company said said it plans to use most of the proceeds from the initial public offering (IPO) to boost production and carry out more research and development.

CXMT manufactures dynamic random-access memory (Dram) chips that power AI data centres, mobile phones, PCs, tablets and other devices.