Tech Shares Fall Amid Concerns Over AI Costs and Chinese Chip Competition
South Korean, Japanese and Taiwanese stock indexes dropped sharply on Tuesday as investors worried about AI spending and rising competition from China in memory chips.
Technology shares declined on Tuesday as investors expressed concerns about the cost of building artificial-intelligence infrastructure and increasing competition from Chinese manufacturers of memory chips, a market previously led by South Korea and other Asian producers.
South Korea's Kospi index fell more than 10 percent, prompting a temporary trading halt, while Japan's and Taiwan's benchmark indexes each slipped about 4 percent. Mainland Chinese stocks also dropped over 2 percent.
In the United States, Nasdaq futures were down roughly 1 percent. Micron Technology shares were down 6 percent in pre-market trading, and Nvidia also posted a loss, alongside SpaceX. European chip makers were affected as well, with Germany's Infineon falling 4 percent and the Dutch equipment supplier ASML losing 3 percent.
Analysts noted that the combination of high capital expenditures for AI projects and the prospect of stronger Chinese presence in memory-chip production contributed to the broad sell-off across the sector.