Global Chip Selloff Deepens as China's CXMT Memory Push Revives AI Trade Doubts

Chip stocks extended a global selloff on Tuesday, October 13, as worries about the sustainability of AI spending met fresh evidence of Chinese competition in memory chips. Asia took the heaviest hit: South Korea's Kospi fell 5.5%, with SK Hynix down about 10% and Samsung Electronics down about 7%, while Japan's Kioxia dropped more than 13% and the Nikkei 225 lost 1.8%.

The immediate trigger was China's ChangXin Memory Technologies (CXMT), which said over the weekend it had made significant progress on a new chip architecture designed to increase memory density; AFP reported the company aims to release a server-memory product by year-end. MU had already fallen 3.9% on Monday as investors weighed the CXMT threat, and was down 5.8% shortly after Tuesday's open, when AMD was down 3.3% and NVDA and AVGO were each down 1.3%. In premarket trading, WDC was down nearly 4%, and SNDK and MRVL were each down more than 2%.

Broadcom CEO Hock Tan added to the unease, comparing the approach of some investors drawn to the AI boom to gambling and saying "a lot of investors have no clue what they are investing in". Bloomberg tied the move to broader strains in AI financing, including higher interest rates, stretched valuations and the collapsed IPO of Nvidia-backed data center operator Firmus Grid, and noted the Philadelphia Semiconductor Index was down more than 7% from its high earlier this month. Hebe Chen of Vantage Global Prime said the AI machine is still running at full speed but that its fuel, capital, is getting more expensive.

US benchmarks held up far better than chip names. By late morning the S&P 500 was down about 0.2% and the Nasdaq about 0.3%, while the Philadelphia Semiconductor Index was down about 2%, with gains in JPM and GS after their quarterly results cushioning the broader market.

The next tests arrive quickly: ASML and TSMC report results this week, offering a harder read on AI chip demand. Trade Nation's David Morrison noted that a CXMT advance could ease the memory supply tightness investors had been expecting, which makes pricing commentary from memory makers the key signal to watch.