Fear for AI stocks brings down chip stocks: Seoul Stock Exchange plunges by 10%

The KOSPI index on the Seoul Stock Exchange is plunging by 9.8%, Nikkei in Tokyo is falling by 4%, in China - the Shanghai index is losing 1% and the Shenzhen index is falling by 3.4%, Hang Seng in Hong Kong weakened by 0.3%; yesterday on Wall Street - Nvidia and AMD fell by 5%, Sandisk by 11%.

Stock exchanges in Asia are showing a red trend this morning, with a sharp drop on the Seoul Stock Exchange dragging down stocks related to chips and artificial intelligence - following a similar trend in the sector's stocks in New York yesterday.

Samsung shares are plunging by 11.4%, SK Hynix is cut by 11.9%. The American shares of SK Hynix closed at night with a decline of 7.5% to a price of 143.02 dollars. This is the first time since trading began this month that they have fallen below the initial offering price, which stood at 149 dollars. The decline illustrates how quickly investor sentiment has changed toward one of the main beneficiaries of the boom in the field of artificial intelligence.

The chip sector in Japan is also trading with declines. Tokyo Electron is plunging by 10.8%, Advantest is wiping out 10%, and SoftBank Group, which is considered a central exposure to investments in artificial intelligence through its holding in ARM, weakened by 5%, and the Japanese memory chip manufacturer Kioxia is plunging by 18%.

"It seems we are in the despair phase of the decline wave, where technology investors are rushing to exit because the Nasdaq is signaling them to do so," said Matt Simpson, a senior analyst at StoneX. "But right now the KOSPI index is dictating the mood in Asia, and the sight is not good."

According to analysts, the wave of declines reflects a combination of concerns about the financing of artificial intelligence infrastructure, technological progress in China, and the intensification of competition from Chinese companies. Han Ji-young, an analyst at Kiwoom Securities, said that reports that Chinese companies are developing local lithography equipment based on deep ultraviolet radiation (DUV) have reignited concerns that Chinese memory chip manufacturers could accelerate the expansion of production capacity and intensify competition in the global memory market.

The declines are recorded after a volatile day on Wall Street, which ended with mixed movements - the Dow Jones strengthened by 0.5%, the S&P 500 closed stable, and the Nasdaq retreated by 0.2%.

Nvidia fell yesterday by 5% after Bloomberg reported that the cost of insurance against default for the chip giant jumped by the sharpest rate ever, against the backdrop of reports that the company is in negotiations for AI infrastructure deals in the amount of more than 750 billion dollars.