The wave of selling that hit chipmakers in the United States gained strength this Tuesday and reached Asian markets. In Seoul, SK Hynix plunged more than 10%, while Samsung Electronics posted a drop of more than 8%.
The pressure was not limited to the two South Korean giants. LG Innotek fell nearly 14%, and Samsung SDI lost more than 7%. Seoul Semiconductor and LG Chem also posted declines of approximately 6% and more than 4%, respectively.
The negative move spread to other markets in Asia. In Japan, Advantest lost more than 15%, while Tokyo Electron fell more than 9%. SoftBank Group shares dropped more than 8%, and Kioxia lost nearly 5%.
TSMC, one of the leading global chipmakers, was also affected. The company's shares in Taiwan fell more than 2% during the session.
The deterioration came after a negative streak in semiconductor stocks traded in the United States. On Monday, the VanEck Semiconductor ETF (SMH) fell more than 2%, while AMD and Teradyne posted losses of 5% and 4%.
Micron Technology also ended the previous session down close to 2%. The combined behavior of these companies shows how expectations related to investments in artificial intelligence are influencing chipmakers across different markets.
SK Hynix and Samsung Electronics have significant exposure to demand for high-bandwidth memory, a component used in computing systems geared toward artificial intelligence. Therefore, changes in investment expectations from major cloud service providers can quickly affect their shares.
For Owen Lamont, senior vice president at Acadian Asset Management, the intensity of the recent swings highlights the difficulty investors face in assessing the future pace of AI investment.
“At this moment, we are facing incredible uncertainty,” he told CNBC. “No one has any idea how this AI process will affect our economy, and so I think it will be unstable, regardless of what happens.”
Lamont also highlighted the possible effect of leveraged ETFs on swings in the markets of South Korea, Hong Kong and the United States.
“More generally, the entire ecosystem of leveraged ETFs in Korea, as well as in Hong Kong and the United States, is possibly adding volatility and amplifying market fluctuations.”