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AI sell-off deepens as chip stocks slide and borrowing fears rise

Kospi fell more than 10% on Monday, while Japan's Nikkei dropped more than 4% as investors rotated out of major chip names.

Reported · Written up by our desk · Sectors

A broader sell-off in artificial intelligence stocks deepened as chip shares tumbled across Asia, with investors turning away from some of the biggest semiconductor players.

The decline followed a report from The Information that China has started mass production of homegrown deep ultraviolet, or DUV, chipmaking tools, a move Morningstar equity analyst Jing Jie Yu said could reflect progress in China’s chipmaking equipment capabilities and raise concerns about competitive pressure on global chipmaking and equipment leaders.

Markets also weighed stress tied to AI companies’ heavy borrowing, with the Financial Times highlighting that credit default swap pricing tied to names including Oracle, SpaceX, Alphabet, Amazon, Meta, Broadcom, and Nvidia has risen to record highs in recent days.

The impact was visible in index performance, with South Korea’s Kospi dropping more than 10% and trading halted at one point, while Japan’s Nikkei fell more than 4%. In the US, SK’s US-listed shares fell 7% on Monday and Nvidia dropped 5%, with the Philly Semi Stock Exchange Index down 2.23% after also moving lower the prior session, as equity futures pointed to continued weakness.

Latest closeNikkei 225 64,611.15 ▼2.7%|Kospi 6,690.62 ▼5.7%

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