Key facts
- US chipmakers' shares fell on Tuesday amid concerns over China's technological advancements and AI spending.
- Memory chipmaker Micron slipped 4.5% to its lowest since September 16.
- Data storage companies Sandisk, Seagate Technology, and Western Digital also saw significant declines.
- Chinese memory chip giant CXMT reportedly made progress on a new cell architecture to boost memory density.
- Broadcom CEO Hock Tan described AI sector investments as akin to 'casino gambling'.
- Despite recent losses, the Philadelphia chips index remains up over 70% year-to-date.
US chip stocks extended their slide on Tuesday, with memory-related companies leading the losses. Reports of a technological advance by China's CXMT, a memory chip giant, stoked fears of increased competition and added to existing jitters over artificial intelligence spending.
The broader Philadelphia semiconductor index fell 1.5%, marking its fifth consecutive session of declines and reaching its lowest point in approximately four weeks. Memory chipmaker Micron Technology saw its shares drop 4.5% to their lowest level since September 16, continuing a four-day losing streak. Other data storage companies, including Sandisk, Seagate Technology, and Western Digital, also experienced significant drops, sliding 4.3%, 5.9%, and 5.8% respectively.
Media reports this week indicated that CXMT has achieved "key progress" on a new cell architecture designed to enhance memory density. Both Samsung Electronics and SK Hynix, major players in the memory chip market, are reportedly working on similar innovations. In South Korea, shares of Samsung Electronics tumbled over 7%, while SK Hynix slid more than 10%.
Robert Pavlik, senior portfolio manager at Dakota Wealth, described the market's reaction as a rush to take profits, stating, "When you back off and realize there might be competition coming, all the sheep run to the door at the same time." Adding to sector-wide concerns, Broadcom CEO Hock Tan commented on Monday that investments in the AI sector resemble "casino gambling." Broadcom shares fell 0.3%, while other major chip companies like Nvidia, Intel, AMD, and Marvell Technology also saw declines ranging from 0.4% to 2.2%.
Despite the recent downturn, the Philadelphia chips index has gained over 70% so far this year, driven by expectations of robust AI-related demand.