U.S. semiconductor shares continued to trade lower in premarket action on Tuesday as the industry absorbed a second day of selling that began in Asia. The weakness followed an overnight rout among many companies tied to the artificial intelligence supply chain, driven by investor concern over how new AI infrastructure will be paid for and by alarm over accelerating competition from Chinese semiconductor firms.
By 04:46 ET (08:46 GMT), memory names were among the hardest hit. Micron, SanDisk and Western Digital each traded down roughly 4%. Intel fell about 3.2%, Marvell Technology and Applied Materials declined about 2.8% each, while AMD slipped more than 3%. Newly listed U.S. shares of SK Hynix dropped more than 3%, and Super Micro Computer lost around 2.9%.
The market rout had its roots in New York on Monday when Nvidia shares tumbled 5%, erasing its position as the world’s most valuable listed company. The decline followed a report that Nvidia is in discussions to provide about $250 billion toward a large data-center project connected to OpenAI, a development that raised fresh questions among investors about who is bearing the financing burden for massive AI infrastructure builds. In the same session, Apple climbed and overtook Nvidia in market value after posting roughly a 25% gain so far this year.
Those losses fed directly into Asian trading on Tuesday, with investors pulling back from companies seen as primary beneficiaries of the AI spending wave. South Korea’s Kospi plunged around 11%, activating its eighth circuit breaker of the year; trading was briefly suspended following an 8% drop and the index ultimately closed down about 10.8% after trade resumed.
On the day, heavyweight names in the memory segment recorded steep declines. Samsung Electronics and SK Hynix closed roughly 13% and 15% lower, respectively. In Japan, the Nikkei 225 fell 4%, and memory-chip maker Kioxia, which had been one of the stronger performers in the first half of the year, plunged 18%.
Market commentary from analysts cited several drivers behind the broad pullback: investor unease over financing arrangements for AI infrastructure projects, concerns about China’s rapid progress in semiconductor technology, and heightened competitive pressure from Chinese chipmakers. Those factors combined to make shares of firms most exposed to AI-related hardware demand particularly sensitive to shifts in sentiment.
Chinese memory chipmaker CXMT drew attention earlier in the month after a blockbuster Shanghai IPO on July 27 that surged 466% on its debut and raised $8.6 billion. The listing pushed CXMT’s market capitalization to about 3.3 trillion yuan, or roughly $487.73 billion, a figure the report noted is nearly half the valuation of U.S. rival Micron. The dramatic reception for CXMT in Shanghai underscored the intensity of competition for memory-market leadership between Chinese entrants and established global suppliers.
Key points
- AI-linked chip names fell further in U.S. premarket trade after a severe Asian selloff, led by declines in memory and equipment stocks.
- Investor concerns center on how large AI data-center projects are being financed and on increased competitive pressure from Chinese semiconductor firms, factors weighing on valuations.
- Regional market stress was acute: South Korea’s Kospi tumbled about 11%, triggering circuit-breaker mechanisms, while major memory makers including Samsung Electronics and SK Hynix posted double-digit percentage losses.
Risks and uncertainties
- Financing risk - Questions about who will fund large AI infrastructure projects could depress investor appetite for companies tied to those builds, impacting capital-intensive hardware suppliers.
- Competitive pressure from China - Rapid advances by Chinese chipmakers and strong demand-side responses, such as the large CXMT IPO, introduce uncertainty for established global memory vendors.
- Market contagion - Sharp moves in Asian markets, including index circuit breakers, can amplify sentiment-driven selling across related sectors globally, affecting equipment, memory and systems companies.
Investors watching the semiconductor and broader hardware supply chain will be closely monitoring further commentary on project financing arrangements and any indications of how Chinese chipmakers plan to expand market share. For now, the combination of funding concerns and escalating competition has produced notable downside pressure across names most exposed to AI-driven demand.