Asian chip stocks tumble as AI jitters intensify after SK Hynix earnings miss

Asian stock markets extended their sell-off this week, led by a sharp decline in semiconductor shares as investors grew increasingly anxious about the sustainability of the artificial intelligence boom. South Korea's KOSPI index plunged over 10% on Tuesday, triggering a temporary trading halt, before falling another 5% on Wednesday, according to reports from CNA and AP News. The rout was triggered by SK Hynix's second-quarter earnings, which showed a record operating profit of 60.5 trillion won—up 557% year-on-year—but still missed analysts' estimates of 64 trillion won Source: CNBC. Shares of SK Hynix fell 9–12%, while Samsung Electronics dropped 8–12% Source: AP News, BBC.

What's driving the sell-off

Analysts cited several factors. One is rising competition from Chinese chipmakers: CXMT surged 466% on its Shanghai IPO debut, raising at least $8.6 billion, sparking fears that cheaper Chinese alternatives could erode global leaders' margins Source: Euronews, The Guardian. Another is the massive capital spending required by AI companies. The Wall Street Journal reported that Nvidia is in talks to provide $250 billion for an OpenAI data-center project, which sent Nvidia shares down 5% and raised concerns about “circular funding” in the AI industry Source: BBC, The Guardian.

• SK Hynix missed forecasts despite record profit because its higher exposure to high-end AI memory chips meant it benefited less from a rally in conventional memory chips Source: CNA.
• Oil prices rebounded after fresh attacks in the Middle East, with Brent crude jumping 4.2% to $87.58 Source: AP News, CNA.

Despite the sell-off, some analysts view the pullback as a buying opportunity. Kieron Poon of Aberdeen Investments said the volatility “has not changed our long-term positive view” Source: CNBC. Meanwhile, a separate report from MIT Technology Review highlights a talent war: Samsung chip workers are defecting to SK Hynix for larger bonuses, underscoring the shifting dynamics among South Korea's tech giants.