Global chip stocks fell Tuesday as investors reacted to comments from Broadcom's CEO and reports of new memory chip developments in China.
Key facts
- •South Korea's Kospi index fell 6.25% as chip stocks were sold off.
- •Broadcom CEO Hock Tan stated that many AI investors do not understand the assets they are betting on.
- •OpenAI reported annualized revenues of $50 billion at the end of September but remains unprofitable.
- •Chinese chipmaker CXMT is developing new Dram architecture that could challenge major global memory chip producers.
- •US chipmaker Micron Technology saw its shares drop 3.9%.
Shares in semiconductor companies dropped on Tuesday following remarks from Broadcom CEO Hock Tan, who compared AI investors to gamblers in a casino. The market decline was further fueled by reports that Chinese manufacturer CXMT has made progress on new memory chip architecture, raising concerns about increased competition for major industry players.
By the numbers
Market impact across Asia and the US
The sell-off hit major Asian markets, with South Korea’s Kospi index falling 6.25%. Samsung Electronics shares dropped 7.4%, while SK Hynix fell 10%. In Japan, the Nikkei index declined 1.8%, and chip equipment maker Tokyo Electron saw its shares slide 7.15%. SoftBank Group also experienced an 8.5% loss. In the US, Micron Technology shares fell 3.9%, with Nvidia, Advanced Micro Devices, and Broadcom also seeing declines.
Broadcom CEO's assessment of AI investment
Speaking at a conference in Singapore, Hock Tan stated that many investors lack understanding of the AI sector and have set extreme expectations. He noted that while companies like OpenAI show potential revenue growth, they remain loss-making due to high training costs. Tan compared current enterprise AI spending to a child spending tokens at a video arcade, suggesting that much of the revenue is tied to pilot projects rather than guaranteed long-term profitability.
Competition from China
Investor anxiety was compounded by reports that Chinese firm CXMT has developed new Dram architecture designed to increase memory density. Market analysts noted that these developments highlight intense competition in the sector, which could pressure the margins of established leaders like Samsung, SK Hynix, and Micron.
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This article was independently rewritten by ManyPress editorial AI from reporting originally published by Guardian Business.
