The Selloff Hit Every Corner of the Chip World
The numbers are staggering. Since Friday's closing bell, the 20 most valuable chip stocks have lost $1.3 trillion in market value, according to a CNBC analysis of FactSet data.
SK Hynix lost $176 billion, Samsung Electronics dropped $173 billion, and Micron fell $113 billion. AMD's valuation dropped approximately $110 billion, while TSMC's market cap fell by $119 billion.
The pain was not limited to U.S. markets. South Korea's SK Hynix ended Wednesday's session down 9.61%, having previously tumbled more than 15% during the day. Samsung Electronics declined by over 5%, LG Innotek slid 10.89%, and Seoul Semiconductor fell 8.89%.
European chip stocks were mixed, with ASML down 1.77%, ASM International falling 3.28%, and BESI up 1.67%.
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Japan's chip sector also suffered: Kioxia plummeted 13.85%, Tokyo Electron dropped 10.59%, and SoftBank Group - an AI investment proxy due to its Arm stake - fell 6.95%. Taiwan's TSMC fell 3.51%.
Memory chip companies suffered some of the largest losses in U.S. trading on Tuesday: Sandisk shed 14%, Western Digital sank nearly 7%, and Seagate lost more than 8%. SK Hynix's U.S. shares dropped 9%. Intel declined by almost 6%, while AMD gave up 8%.
On mainland Chinese markets, the ChiNext 300 index rose 1.43% on Wednesday, while Hong Kong's semiconductor-focused stock gauge fell 2.5%.
The Philadelphia semiconductor index had climbed 92% in the previous year, even as it dropped nearly 20% over the last month.
This Was About Confidence, Not Fundamentals
Morningstar's chief equity strategist, Michael Field, stated, "This decline appears to be driven largely by sentiment rather than fundamentals." He added, "Simply put, it's loss of confidence."
Charlie Dai, a Forrester vice president and principal analyst, stated that investors are questioning if immediate revenue streams can support the massive AI expenditure, and some are concerned about increasing rivalry in the chip and AI infrastructure space. Dai added that the sell-off is "less about weakening AI demand and more about a repricing of expectations after an exceptionally strong rally."
David Riedel, who runs Riedel Research Group, informed CNBC's "Squawk Box Asia" that the decline shows investors "giving back a little bit of the froth that was in the AI market." He said memory chipmakers "will be fine" but "just have to give back some of those sudden gains," and added that "the market is healthy."
Kieron Poon, who manages Asian equities for Aberdeen Investments, noted that the recent market turbulence "has not changed our long-term positive view" and that "the recent market pullback has brought valuations to more attractive levels, creating opportunities for us to add exposure to high quality businesses at more reasonable prices."
Alphabet announced that it will raise its capital expenditure projections for 2026 due to the urgent need to construct additional AI infrastructure.
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