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Shares in major chip firms have fallen sharply in the US and Asia as a sell-off in artificial intelligence-related stocks deepened.<\/b><\/p>\n
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.<\/p>\n
The slump was led by technology firms, with Samsung Electronics and SK Hynix both falling by more than 13%.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
In recent months stock market trading has been particularly volatile in South Korea as it has attracted large numbers of retail investors<\/a>.<\/p>\n On Monday, US-listed shares in SK Hynix fell by 7.5% to well below the $149 (\u00a3112.11) offer price when it made a record-breaking debut on the Nasdaq<\/a> on 9 July.<\/p>\n Japan’s Nikkei 225, which is also dominated by tech companies, closed almost 4% lower.<\/p>\n Jane Sydenham, investment director at investment manager Rathbones, said the Asian market slump came after “phenomenal rises” over the last few months.<\/p>\n She said the Korean market in particular is “very concentrated” with a lot of investment in Samsung and SK Synix, both of which fell sharply.<\/p>\n In addition, a lot of Korean investors buy stocks with debt, which “exaggerates the movements when we get a correction like this”.<\/p>\n Sydenham said the sell-off was triggered by Nvidia, whose 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.<\/p>\n The BBC has contacted Nvidia and OpenAI for comment.<\/p>\n The decline allowed Apple to overtake Nvidia as the world’s most valuable company after the iPhone maker rose by about 25% this year.<\/p>\n Cheng Chye Hsern, head of investments at wealth manager Providend, said Apple is one the few tech firms “not taking part in the AI race”. <\/p>\n He said this makes the stock appealing to investors who are concerned about the billions its rivals are spending on data centres.<\/p>\n Sydenham said AI spending among tech firms is “something that’s been testing investors’ nerves on and off in the last couple of months”. <\/p>\n “Is it going to earn a proper return in the future? That’s what investors are worried about.”<\/p>\n Jun Bei Liu, the founder of investment firm Ten Cap, told the BBC there are also worries about increasing competition from China.<\/p>\n As such, she said investors are “taking some profit off the table” but are likely to reinvest in these stocks after the US holiday season, she said.<\/p>\n 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<\/a>.<\/p>\n 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.<\/p>\n CXMT manufactures dynamic random-access memory (Dram) chips that power AI data centres, mobile phones, PCs, tablets and other devices.<\/p>\n The big European stock markets all shrugged off the AI spending concerns when they opened on Tuesday.<\/p>\n The UK’s FTSE 100 index, France’s Cac 40, and the German Dax 40 have relatively less exposure to AI and were all around 0.6% up a couple of hours after trading began.<\/p>\n<\/div>\n