Samsung Electronics and SK Hynix shares fell by more than 10% as investors grew concerned over AI spending and Chinese competition.
Samsung Electronics and SK Hynix shares plummeted by more than 10% on Tuesday, dragging the South Korean Kospi index to its lowest level in three months. The sell-off was driven by investor anxiety regarding the massive borrowing required for AI datacentre expansion and the growing competitive pressure from cheaper Chinese chip-making tools. Analysts noted that the market reaction was a kneejerk response to China's progress in deep ultraviolet chip-making equipment. Additionally, investors are wary of 'circular funding' within the AI industry, highlighted by reports that Nvidia is discussing a $250 billion funding backstop for OpenAI. While US tech stocks generally slid, the Dow Jones Industrial Average rose slightly. Meanwhile, President Trump noted that the US and Iran have halted active fighting and are in diplomatic talks, which contributed to a cooling of oil prices. The Federal Reserve is scheduled to begin a two-day policy meeting on Tuesday to determine the next move for interest rates.