Chip stocks tanked across Asia on Tuesday, rattled by the threat of Chinese competition and worries about who's paying for the AI boom, while sliding oil prices did little to allay nerves about U.S. rate hikes potentially starting as soon as this week.
South Korea's KOSPI .KS11 dived almost 10% to a three-month low, triggering a circuit breaker on the way down as it heads for its largest monthly fall since the Asian financial crisis in 1997. The index had more than tripled over 12 months to June, but it has shed more than a third of its value since that peak.
Shares in SK Hynix 000660.KS and Samsung Electronics 005930.KS, which are under extra pressure in a market transformed by leverage, made losses of more than 12% as their stratospheric rally unwinds in a hurry.
Japan's Nikkei .N225 slid about 4%, touching a two-year low, with the selloff following a 2.2% drop for the Philadelphia Semiconductor index .SOX on Monday.
"There is no one red flag that's moving the market," said Chris Weston, head of research at broker Pepperstone in Melbourne, but rather a combination of nerves about AI funding and China's rise as a competitor all along the supply chain.
China has begun manufacturing domestically developed immersion deep ultraviolet lithography machines, a chipmaking tool long dominated by Dutch supplier ASML ASML.AS, The Information reported on Monday, sending ASML shares down 8.5%.
China's CXMT Corp 688825.SS, the world's fourth-biggest memory maker, listed and raised $8.6 billion on Monday, too, ending its debut session as China's most valuable company.
"The market's concern lies less in CXMT's current earnings and more in its potential for accelerated capacity expansion to rival Korean companies," said Kim Seok-hwan, a Seoul-based market analyst at Mirae Asset Securities.
Nvidia NVDA.O shares had already shed 5% overnight after the Wall Street Journal reported the company is in talks to provide roughly $250 billion in financing guarantees for OpenAI as part of a massive data centre project.
CXMT shares were last about 3% lower in bumpy trade in Shanghai, while in Tokyo market darlings Kioxia 285A.T, down 18%, and Tokyo Electron 8035.T, down 11%, were among the top losers.
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