HONG KONG (AP) — South Korea’s Kospi index plunged nearly 11% on Tuesday on heavy selling of computer chipmaking stocks that have been battered recently by waves of fears that the boom in artificial intelligence may turn out to be a bubble.
European shares opened moderately higher after a day of losses for most Asian markets, while U.S. futures were mixed.
Oil prices declined more than 2%.
Trading was temporarily halted at times as Kospi dropped to its
lowest level since April, closing 10.8% lower at 6,023.66. Shares in chipmaker Samsung Electronics sank 13.4% while those of SK Hynix tumbled 14.7%.
In early European trading, Germany's DAX gained 0.6% to 25,511.93, while the CAC 40 in Paris added 0.5% to 8,450.71. Britain's FTSE 100 picked up 0.6% to 10,846.42.
The future for the S&P 500 slipped 0.1% while that for the Dow Jones Industrial Average gained 0.3%.
On Monday, SK Hynix's U.S.-traded shares fell to below the $149 initial public offering, or IPO, price for its Wall Street debut earlier this month, closing at $143 a share.
A key factor driving the selling of AI-related shares, analysts said, is the expectation that rising competition from Chinese AI startups and chipmakers might undermine gains for leading global companies whose shares have skyrocketed in the past months due to the AI frenzy.
A 466% jump in the price of Chinese memory chipmaker CXMT in its trading debut Monday underscored such concerns. CXMT raised at least $8.6 billion in its IPO in Shanghai. But its shares dropped 4% Tuesday.
Tuesday’s chip stock sell-off also followed a report in the technology news publication The Information that China has begun mass production of homegrown deep ultraviolet, or DUV, chipmaking tools. Such equipment is used to print minute circuit patterns onto silicon wafers.
“We believe the market was likely spooked by the progress of China’s chipmaking equipment capabilities, and was worried that this progress would threaten the competitive position of global chipmaking and chip equipment leaders,” said equity analyst Jing Jie Yu of Morningstar.
“That said, we believe the sell-off today is largely a knee-jerk reaction and overdone,” he said. The dominant position of global chipmaking leaders is unlikely to be threatened meaningfully, he said.
Elsewhere in Asia, Tokyo’s Nikkei 225 dropped 4% to 62,364.92. The Taiex in Taiwan skidded 4.7%, with shares of leading chipmaker TSMC, or Taiwan Semiconductor Manufacturing Co, falling 3%.
Hong Kong's Hang Seng gained 0.4% to 25,310.85, while the Shanghai Composite index lost 1.2% to 3,813.31.
Australia's S&P/ASX 200 gained 0.6% to 8,947.80.
India's Sensex edged 0.1% lower.
Oil prices extended their declines as the U.S. and Iran refrained from strikes in their on-again, off-again war. Regional officials said Monday that mediators had made progress in getting the U.S. and Iran back to negotiations after they paused attacks.
Brent crude, the international standard, fell 2.2% to $84.03 a barrel. It was trading around $72 per barrel before the Iran war began in late February.
U.S. benchmark crude oil lost 1.7% to $81.20 a barrel.
On Monday, the benchmark S&P 500 gained less than 0.1%. The Dow Jones Industrial Average ended 0.5% higher, while the technology-heavy Nasdaq composite edged 0.2% lower.
Shares of several major chipmaking stocks declined, pulling benchmarks lower. Shares of AMD, or Advanced Micro Devices, sank 5.2%, Nvidia dropped 5%, and Micron Technology fell 2.3%.
In other dealings early Tuesday, the U.S. dollar rose to 163.82 Japanese yen from 163.75 yen. The euro fell to $1.1367 from $1.1369.
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Kurtenbach reported from Bangkok.
