Chip Stocks Tumble on A.I. Spending Fears and Rising Chinese Competition

Semiconductor stocks dropped on Tuesday as fears of runaway artificial intelligence spending converged with a growing threat from Chinese rivals to the biggest players in the memory chip industry.South Korea’s benchmark stock market, home to some highly leveraged bets on the semiconductor industry, tumbled, led by steep losses in Samsung Electronics and SK Hynix, the world’s two leading memory chip makers.The sell-off followed Chinese media reports that China’s CXMT had unveiled a breakthrough in chip design.Other technology stocks around the world suffered declines, with losses concentrated in the chip-making sector.

The Philadelphia Semiconductor Index, a benchmark for the industry, fell 1.3 percent and is more than 17 percent below its recent peak in June.Tech stocks slide.South Korea’s KOSPI fell 5.5 percent on Tuesday, driven by significant declines in its two largest members: Samsung Electronics and SK Hynix.The reported breakthrough by China’s CXMT, which would let memory chips store more data without increasing in size, could give the Chinese company an edge over its South Korean rivals, which have struggled to produce enough memory chips to keep pace with insatiable global A.I.

demand.Stocks elsewhere in Asia were broadly lower.Japan’s Nikkei 225 and Taiwanese shares fell nearly 2 percent, weighed down by technology stocks.

Taiwan Semiconductor Manufacturing Company fell 2 percent and Japan’s SoftBank Group, a major investor in A.I., fell more than 8 percent.In Europe, the chip makers Infineon and STMicroelectronics fell by roughly 4 percent and ASML, a key supplier to the chip industry, shed about 3 percent.But the Stoxx 600, a broad regional index that is less driven by tech than benchmarks elsewhere, rose modestly.The S&P 500 was flat in early trading on Tuesday.The Wall Street giant Goldman Sachs reported Tuesday that its third-quarter results were strengthened by the lucrative fees it earned off leading the underwriting of SpaceX�...