Korean chip stocks tumble with SK Hynix below US listing price amid China competition fears

South Korean chip stocks slumped on Tuesday, with Samsung Electronics and SK Hynix falling as much as 9.5 percent and 11.1 percent, respectively, as investors retreated from AI-related stocks amid mounting concerns over financing risks tied to AI infrastructure spending and intensifying competition from China.

SK Hynix's U.S.-listed shares had already slumped overnight, closing at US$143.02 (HK$1,115.56), below their US$149 initial public offering price.

The benchmark KOSPI dropped as much as 9.19 percent to 6,134 points, the lowest since April 20.

The sector-wide selloff followed a series of developments that renewed doubts about the sustainability of the AI-driven semiconductor rally.

SK Hynix, a key supplier of high-bandwidth memory (HBM) chips to Nvidia, has been one of the biggest beneficiaries of the AI spending boom, making its shares particularly sensitive to shifts in investor sentiment toward the sector.

Analysts said the selloff reflected a combination of concerns over AI infrastructure financing, China's technological advances and rising competition from Chinese firms.

Han Ji-young, an analyst at Kiwoom Securities, said reports that Chinese companies were developing domestic deep ultraviolet (DUV) lithography equipment had reignited concerns that Chinese memory makers could accelerate capacity expansion, intensifying competition in the global memory market.

While details such as the companies involved, equipment performance and commercialization timelines had yet to be disclosed, the news had cooled investor sentiment as the investment narrative for semiconductor stocks had already weakened, he said.

Han added that investors were also becoming increasingly cautious ahead of a string of earnings reports due later this week.

"Despite stronger-than-expected earnings from Samsung Electronics earlier this month and Alphabet last week, semiconductor shares experienced sharp declines after the results," he said.

In Japan, Nikkei 225 fell as much as 4 percent to 62,018 points, the lowest since May 22. Topix also fell by 2.91 percent.

Separately, a Wall Street Journal report that Nvidia could provide a roughly US$250 billion financial backstop for an OpenAI data-centre project sent Nvidia shares down nearly 5 percent, with investors questioning the extent to which the AI chip leader may be financing its own customers.

Further weighing on sentiment, the growing popularity of low-cost Chinese open-source AI models such as Kimi K3 raised questions about whether future AI workloads could prove less intensive than previously expected — meaning less demand for advanced AI chips and HBM.

Meanwhile, Chinese memory-chip maker CXMT's strong stock-market debut fuelled concerns about intensifying competition in the global memory industry.

The listing came after reports that Apple had been lobbying the Trump administration to allow the use of Chinese-made chips in some of its products, further unsettling investors already concerned about China's growing technological capabilities.

Reuters and staff reporter

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