Global markets today: The semiconductor stocks across bourses are under severe selling pressure. In the US stock market, ASML shares tumbled by up to 8.40% during Monday’s trading, while ASM International and BE Semiconductor stocks also witnessed sizeable losses. SK Hynix’s share price tumbled over 7% on Monday. Amongst chipmaker stocks, NVDIA’s share price led the sell-off, losing around 5%.
The VanEck Semiconductor ETF fell more than 2%, extending Friday’s losses, as concerns over AI-related valuations resurfaced. Chip stocks had briefly rallied earlier in the session following Chinese memory-chip maker CXMT’s blockbuster Shanghai IPO before profit-taking erased those gains. Meanwhile, WTI crude extended its decline after Washington and Tehran maintained their pause in hostilities and resumed efforts to revive diplomatic negotiations.
The trend continued in Asian markets today, especially in South Korea’s KOSPI and Japan’s Nikkei 225. In the South Korean market today, Samsung Electronics’ share price finished over 13%, while Hanmi Semiconductor’s share price crashed over 12% on Tuesday.
In the Japanese market, Kioxia Holdings’ share price tanked over 18%, Advantest & Renesas shares nosedived over 10%, whereas Tokyo Electron’s share price fell up to 11% during Tuesday trading.
Why are semiconductor stocks under selling pressure?
On why semiconductor stocks are under selling pressure in the global markets today, Ponmudi R, CEO at Enrich Money, said, “Semiconductor stocks are falling in the global markets today, following reports that China has begun manufacturing its own deep ultraviolet lithography machines, raising concerns over the Dutch company’s long-term competitive position.”
The Enrich Money CEO said the global markets are poised for a weaker session as renewed selling in semiconductor stocks continues to weigh on investor sentiment, overshadowing the positive impact of lower crude oil prices.
“Selling pressure in semiconductor stocks in the global markets is suggesting that concerns over elevated AI-related valuations remain a dominant theme despite the easing geopolitical backdrop,” said Ponmudi R of Enrich Money.
Rising concern over the profitability of the semiconductor space
Pointing towards the rising concern over the profitability of the semiconductor space, Dorian Carrell, Head of Multi-asset Income at Schroders, told Reuters, “You’ve seen the companies paying for AI, the hyperscalers, not really participating because of concerns about the cost and the degree of leverage that needs to be taken on. And now we’re seeing questions over the profitability of the semiconductor space, particularly in Asia.”
“The broader AI story has some way to go, but these kinds of (profit) growth rates are rarely sustained. We think that it’s healthy that the market’s questioning these things,” Dorian Carrell added.
According to the news agency Reuters, China has begun manufacturing domestically developed immersion deep ultraviolet lithography machines, a chipmaking tool long dominated by Dutch supplier ASML, The Information reported on Monday, sending ASML shares down 8.5%.
China’s CXMT Corp, 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.
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