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Samsung Electronics and SK Hynix shares plunge as investors weigh AI spending and Chinese competition

Samsung Electronics and SK Hynix experienced significant share price declines on Tuesday, dragging South Korea's KOSPI index down over 10%. Samsung Electronics fell 13.4% as investors reacted to concerns regarding the high costs of AI infrastructure financing and increasing competition from Chinese manufacturers. SK Hynix, a leading supplier of high-bandwidth memory chips for AI systems, dropped 14.7% as the market assessed the sustainability of current AI spending and the reliability of domestic Chinese chip-making equipment. These moves reflected a broader sell-off in the global semiconductor sector, with major U.S. chipmakers like Intel and AMD also seeing losses. Analysts noted that the market was spooked by reports of China's progress in developing deep-ultraviolet lithography machines. While the AI investment cycle remains a primary driver of growth, investors are now scrutinizing the profitability of the semiconductor space and the degree of leverage required to fund the expansion of AI datacentres.

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