Shares in semiconductor companies declined on Tuesday following comments from Broadcom's CEO, who likened many AI investors to "casino" gamblers. Additionally, Chinese memory chip manufacturer CXMT announced advancements in new chip architecture.
South Korea's Kospi index dropped 6.25% as investors sold off chip stocks, with other Asian markets also experiencing declines. Japan's Nikkei fell by 1.8%, and Taiwan's exchange dropped almost 2%, affecting the country's leading chip maker, TSMC. Samsung Electronics shares fell 7.4%, while SK Hynix, a memory chip maker, saw a 10% decrease.
In Japan, chip equipment producer Tokyo Electron's shares fell by 7.15%, and SoftBank Group, an OpenAI investor, lost 8.5%.
US stock futures suggested a mixed opening on Wall Street following a 0.4% slip in the Nasdaq composite. American chip companies like Micron Technology fell by 3.9%, with Nvidia, Advanced Micro Devices, and Broadcom also experiencing declines. Crude oil prices dropped amid rising tensions in the Middle East.
AI stocks have experienced volatility recently due to concerns over companies investing heavily in AI infrastructure using debt. The latest sell-off followed a report that CXMT had made significant progress on a new DRAM architecture, which could increase memory density and potentially challenge major memory chip makers such as Samsung, SK Hynix, and Micron.
CXMT, which had a successful debut on the Shanghai stock market in late July, produces DRAM chips used for data storage in AI calculations.
Hock Tan, CEO of Broadcom, commented that the AI boom had attracted investors unfamiliar with the technology they were investing in. Speaking at a conference in Singapore, he likened the situation to a casino, where investors set unrealistic expectations without understanding the investments.
AI companies like ChatGPT's OpenAI continue to report losses. Tan mentioned OpenAI's $50 billion in annualized revenues suggested potential but did not guarantee long-term profitability. He noted that much of AI labs' enterprise revenue came from pilot projects, likening it to playing video games without learning anything substantial.
These developments reflect broader market uncertainties and the complex dynamics of the semiconductor and AI industries.
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