Chip Shares Tumble Worldwide as Investors Question AI Spending Returns
Uncertainty over whether large AI investments will pay off drove a steep sell-off in semiconductor stocks across global markets. South Korea's Kospi fell by as much as 8% intraday, briefly halting trading, while Samsung and SK Hynix each dropped more than 10%. Investors moved toward safe-haven assets, pushing Treasury yields lower, as attention turned to inflation and upcoming Fed commentary.
The pullback started in American semiconductor names and spread into Asia. South Korea’s benchmark briefly stopped trading after an intraday slide of up to 8%, while Samsung and SK Hynix each lost more than a tenth of their value. Regional gauges also weakened: MSCI Asia Pacific slipped 2.8%, Nasdaq 100 futures eased 0.9%, and European futures pointed to roughly 1% opening losses.
As investors sought safety, Treasury prices rose. The 10-year yield declined eight basis points to 5.11%, and the two-year fell seven basis points to 4.72%. The dollar softened. Oil’s climb amid Middle East conflict added to inflation worries, with markets awaiting Fed Chair Warsh’s Friday remarks in Bangkok.
The chip sell-off may affect households with retirement or investment accounts tied to equities, as paper losses could dent confidence. Tech workers and suppliers in South Korea and elsewhere could face slower hiring or investment if AI spending is reassessed. Lower Treasury yields may modestly ease borrowing costs, while inflation and rate uncertainty could keep mortgage, credit, and business costs volatile.