US chip stocks slide as China’s CXMT advances; AI spending fears rattle investors
Shares in US chip manufacturers tumbled, primarily influenced by memory and data storage firms, following competitive moves from China's CXMT. The sector faced significant pressure, stemming from concerns over escalating rivalry and demands for AI investments. Key players like Micron Technology, Seagate Technology, SanDisk, and Western Digital saw notable declines in their stock prices.
US chip stocks experienced a sharp decline on Tuesday, primarily driven by memory-chip and data-storage companies, according to Reuters. The Philadelphia Semiconductor Index fell by 1.5%, marking its lowest level in nearly four weeks following the index's fifth consecutive decline. Micron Technology witnessed the steepest drop, shedding 4.5% to its lowest point since September, marking its fourth straight daily decline.
Data-storage firms further suffered, with SanDisk, Seagate Technology, and Western Digital all recording significant losses of 4.3%, 5.9%, and 5.8%, respectively.
The slide in chip stocks was largely fueled by concerns over China's CXMT, a memory-chip manufacturer that reportedly made significant progress in developing a new cell architecture to boost memory density. South Korean rivals Samsung Electronics and SK Hynix are also reportedly working on comparable technology. South Korea's Samsung shares plummeted over 7%, while SK Hynix declined by more than 10%.
Robert Pavlik, a senior portfolio manager at Dakota Wealth, attributed the market sell-off to investors seeking to secure profits and reassess the competitive landscape. AI spending also added to the pressure on the sector, following comments from Broadcom CEO Hock Tan, who likened the spending to "casino gambling." Broadcom's shares saw a minor decline of 0.3%.
Other major chip manufacturers, such as Nvidia, Intel, AMD, and Marvell Technology, also experienced declines. Nvidia fell by 0.4%, Intel dropped 1.1%, AMD lost 1.2%, and Marvell Technology experienced a 2.2% decrease.
Despite the recent downturn, the Philadelphia Semiconductor Index has still managed to post a gain of over 70% this year. This performance can be attributed to expectations of robust demand in the artificial intelligence sector.
Written by urgent.news from The Economic Times - Top News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
