Global chip stocks tumble as AI valuation fears and rate concerns trigger selloff

Price ActionMacro Impact 4

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Global chip stocks tumbled on Tuesday as a broad selloff in technology shares swept from Asia through Europe and threatened to drag Wall Street lower at the open, fuelled by mounting concerns over stretched AI valuations and the prospect of higher U.S. borrowing costs. In South Korea, memory chip giants Samsung Electronics and SK Hynix, which together account for roughly half of the benchmark Kospi index's market capitalisation, both fell more than 12%, triggering a 20-minute trading halt on the Kospi and leaving the index down 10% on the day. Japanese stocks also fell sharply, with the Nikkei Stock Average closing 3.55% lower. The selling carried into Europe, where ASML slid more than 5%, while Infineon, ASM International, and STMicroelectronics each lost between 5% and 8%. U.S. premarket trading pointed to a bruising open, with Micron falling more than 8%, Intel and Marvell Technology each dropping around 7.8%, and Nvidia, AMD, and TSMC losing between 3% and 7%, while the iShares Semiconductor ETF fell 4.6%. Traders are now pricing in 50 basis points of Federal Reserve rate increases by December, double the expectation from two weeks ago, as investors adjust to a more hawkish policy stance under new Federal Reserve Chair Kevin Warsh.