Global AI, chip market cap sheds W1,340 trillion

Nvidia loses $291 billion; SK hynix drops $243.8 billion

Memory trio accounts for about 40% of total decline

US rate hike fears compound China memory rivalry

Stock market data is displayed on an outdoor screen at the Nasdaq MarketSite in New York. [Reuters]
Stock market data is displayed on an outdoor screen at the Nasdaq MarketSite in New York. [Reuters]

The combined market capitalization of the world's leading AI and semiconductor companies shed more than $1 trillion in just four trading days, as fears over further US interest rate hikes, the cost of AI investment and China's advancing memory chip technology triggered a broad selloff. Korean memory chipmakers Samsung Electronics and SK hynix were among the hardest hit.

According to CNBC, the market cap of the top 20 AI and semiconductor companies by valuation fell by more than $1 trillion over the four trading sessions from Monday through Thursday (local time).

Nvidia, the bellwether AI stock, dropped 5.3% over the period, erasing roughly $291 billion in market cap. SK hynix and Samsung Electronics followed with losses of $243.8 billion and $237.3 billion, respectively. Together, the three major memory chipmakers — Samsung Electronics, SK hynix and US-based Micron — accounted for about 40% of the total market cap decline.

The selloff spread across memory and data storage companies more broadly. According to Benzinga, a US financial news outlet, the combined market cap of six companies — Samsung Electronics, SK hynix, Micron, Kioxia, SanDisk and Western Digital — fell by a total of $1.09 trillion since Oct. 2.

Semiconductor stocks also weakened on Wall Street on Thursday (local time). Nvidia fell 1.8%, Intel dropped 2.8% and AMD slid 1.5%. Dell Technologies, which operates AI server and data center businesses, tumbled 6.8%.

Even an upbeat earnings outlook from TSMC, the world's largest foundry, failed to restore investor confidence. The Taiwanese chipmaker projected fourth-quarter sales of up to $54.3 billion, topping market expectations — yet its shares still fell 2.0% on the Taiwan Stock Exchange, and its American depositary receipts dropped 1.8% in New York.

Markets are growing concerned that the semiconductor "supercycle" driven by the AI boom may be losing steam. The rising prospect of additional Federal Reserve rate hikes has added to worries, as higher borrowing costs could weigh on financing for AI data center construction.

China's advancing memory chip technology has emerged as another variable. CXMT recently unveiled a new stacking architecture designed to boost memory density, heightening concerns about a potential surge in Chinese supply.

Some market observers warn that expanded Chinese production capacity could trigger a memory chip oversupply as early as 2029. Elon Musk, CEO of Tesla, posted on X, formerly Twitter, that "China will produce a staggering amount of RAM in 2028."

Analysts have raised particular concern that a Chinese supply surge could weigh more heavily on Korean chipmakers than on their peers.

Gil Luria, an analyst at D.A. Davidson, told CNBC that "if there is an impact, it will be on SK hynix and Samsung Electronics, not Micron." That divergence played out on Thursday (local time), as Micron shares swung between gains and losses before closing up 1.9% — bucking the trend seen among Korean chipmakers.

However, some analysts push back on the idea that rising Chinese production will immediately trigger the kind of sharp memory price declines seen in past downturns. With demand for high-performance memory in AI data centers remaining robust, views are divided on how much the supply increase will ultimately affect the market.


sjy@heraldcorp.com