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Memory-linked stocks fell on Tuesday, extending a sell-off sparked by worries over artificial intelligence financing and intensifying competition.
Memory chip giant Micron slipped 3.62% while other memory-related names such as SanDisk, Seagate and Western Digital also dipped.
The slide, which followed declines on Wall Street on Monday, comes as investors assessed intensifying competition from China’s ChangXin Memory Technologies, or CXMT.
Over the weekendCXMT announced significant progress in developing a new chip architecture, designed to increase memory density by packing more data into a smaller space.
CXMT is China’s leading rival to the likes of Micron and South Korean heavyweights SK Hynix and Samsung Electronics. Analysts broadly see CXMT as trailing the U.S. and South Korean memory leaders, which means any advancement from the Chinese firm could add more competition to the market leaders.
“Investors are jittery and looking for excuses to take profit on AI-related stocks that have outperformed this year, especially memory stocks,” said UBP’s senior equity advisor Vey-Sern Ling.
“In reality, while the Chinese memory makers can potentially become a threat to global demand-supply balance over time, in the short run they continue to face technology hurdles, especially for more advanced memory like HBM,” Ling told CNBC via email.
CXMT shares closed 2.8% lower in Shanghai.
Micron, Seagate, SanDisk, Western Digital stock chart.
‘Vulnerable’ AI sentiment?
Phillip Wool, chief market strategist at Rayliant Global Advisors, said CXMT’s breakthrough marked a significant milestone for Chinese chipmakersdemonstrating their ability to overcome technology restrictions and potentially challenge established players sooner than expected.
But he cautioned that the market reaction appeared disproportionate to the immediate competitive threat, given that CXMT has yet to demonstrate large-scale production and continues to lag Samsung and SK Hynix in market share.
“More importantly, we’re not even talking about HBM here, and the Korean chipmakers are still unquestionably dominating that space, with very little threat at all from the likes of CXMT or anyone else for the foreseeable future,” Wool said.
He said the sharp sell-off reflected broader anxiety over the AI trade rather than a fundamental shift in the competitive landscape.
“I read that more as a sign of how vulnerable AI sentiment is at this moment,” Wool said, warning that volatility could persist as investors reassess chip demand and how long semiconductor manufacturers can sustain their pricing power.
The chief executives of Intel and Broadcom have warned that access to capital could emerge as a major headwind to the AI boom, even as demand for computing infrastructure continues to outstrip supply.
Investors are also looking ahead to a busy week of corporate earnings and U.S. inflation data, which could provide fresh clues on the outlook for interest rates that often have an inverse correlation with growth stocks.
Global tech stocks slump
Adding fuel to the sell-off was a post by Tesla and SpaceX boss Elon Musk, who said China has the ability to scale production once it figures out how to manufacture something.
“When China figures out how to manufacture a product, their ability to scale is often greater than the rest of the world combined,” Musk said on Monday.
European chip stocks also sank in early morning trade, with semiconductor equipment maker ASML down 3.3%, and STMicroelectronics and German chip maker Infineon both down 5%. Dutch firms BE Semiconductor and ASM International were both around 4% lower at the open.
Shares of South Korean chip giant SK Hynix, a leading supplier of high-bandwidth memory chips used in artificial intelligence applications, plunged more than 10%, while rival Samsung Electronics shed 7.4% — both hitting their lowest levels since August. SK Hynix’s U.S.-listed stock was down around 5% in premarket trading.
In Japan, shares of tech-focused investment giant SoftBank Group sank 8.5%. The group, which has significant exposure to the global AI industry through its huge investment in OpenAI, led a broader retreat in Japanese semiconductor and electronics shares.
Tokyo Electrona major supplier of chipmaking equipment, dropped 7.2%, while Advantestwhich makes semiconductor testing equipment, declined 2.9%. Other Japanese technology stocks also came under pressure. Lasertec fell over 5%, Disco lost 4.7% and Renesas Electronics shed 5.9%.
The declines followed a weak session for technology stocks on Wall Street, where the Nasdaq Composite dropped 0.44% on Monday. U.S. memory chipmaker Micron Technology slid 3.9% as