Trading on South Korea’s benchmark Kospi index was temporarily paused on Tuesday morning after it slumped by 8%, as a deepening sell-off in artificial intelligence-related stocks swept across global markets. The 20-minute halt, triggered by a circuit breaker mechanism designed to calm panic selling, did little to stem the losses: the index closed 10.8% lower, led by technology firms Samsung Electronics and SK Hynix, which both fell by more than 13%.
The rout in Asia followed a sharp decline in New York on Monday, where AI chip giant Nvidia lost 5% of its value, ceding its position as the world’s most valuable listed company to Apple. Nvidia’s slide came after the Wall Street Journal reported that the company is in talks to provide around $250bn for OpenAI as part of a massive data-centre project. The BBC has contacted Nvidia and OpenAI for comment.
“South Korea's Kospi index was briefly halted after slumping 8% amid a deepening sell-off in AI-related chip stocks.”
Apple, which has risen about 25% this year, now sits atop the market-cap rankings. Meanwhile, Japan’s tech-heavy Nikkei 225 closed almost 4% lower.
The Kospi has been halted multiple times this year under the circuit-breaker rule, reflecting extreme volatility in a market that has attracted large numbers of retail investors. 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.
US-listed shares in SK Hynix fell by 7.5% on Monday, pushing them well below the $149 offer price from its record-breaking Nasdaq debut on 9 July.
Jun Bei Liu, founder of investment firm Ten Cap, told the BBC that there are concerns about the amount of money being poured into AI development as well as increasing competition from China. Against that backdrop, investors are “taking some profit off the table” but are likely to reinvest in these stocks after the US holiday season, she said.
In a stark contrast to the broad sell-off, 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. The company said it plans to use most of the proceeds from the initial public offering to boost production and carry out more research and development. CXMT manufactures dynamic random-access memory chips that power AI data centres, mobile phones, PCs and tablets.
The divergent fortunes of chip stocks highlight the jittery mood among investors, who are weighing the immense promise of AI against the soaring costs and uncertain returns of the technology.