South Korea’s Kospi stock index suffered a dramatic decline of more than 10% on Tuesday, as investors dumped shares in chipmaking companies amid growing uncertainty about whether the artificial intelligence boom can be sustained.
The index fell to its lowest point since April, with major chipmakers Samsung Electronics and SK Hynix both seeing their share prices drop sharply.
The selloff wasn’t limited to South Korea. Across the broader Asian market, Tokyo’s Nikkei 225 slid 3%, while Taiwan’s Taiex index dropped 3.8%. Oil prices also dipped more than 1%, though U.S. futures showed little movement.
A key driver behind the selling pressure on AI-linked stocks is the growing belief that Chinese artificial intelligence startups and chipmakers could erode the competitive advantages that have sent global tech company valuations soaring during the AI investment surge.
Those fears were amplified after Chinese chipmaker CXMT saw its stock price skyrocket 466% on its first day of trading Monday. The company had raised a minimum of $8.6 billion through its initial public offering on Shanghai’s technology-focused STAR exchange.
Kim Seok-hwan, a Seoul-based market analyst at Mirae Asset Securities, explained the concern this way: “The market’s concern lies less in CXMT’s current earnings and more in its potential for accelerated capacity expansion to rival Korean companies and technology development following its IPO.”
