Micron, ASML and SoftBank slide as chip selloff spreads across markets

Technology stocks fell on Tuesday, 13 October, extending a selloff that CNBC reported was sparked by worries over artificial intelligence financing and intensifying competition. Memory chip maker Micron was down around 3% in U.S. premarket trading, according to CNBC, with Broadcom also under pressure. SanDisk, Seagate and Western Digital were each around 3% lower.

In Europe, semiconductor equipment maker ASML fell 3.3% in early morning trade, according to CNBC. STMicroelectronics and German chip maker Infineon were both down 5%, while Dutch firms BE Semiconductor and ASM International were each around 4% lower at the open.

In Asia, SK Hynix, a leading supplier of high-bandwidth memory chips used in AI applications, fell more than 10%, and rival Samsung Electronics shed 7.4%, CNBC reported. Both hit their lowest levels since August, and SK Hynix's U.S.-listed stock was down around 5% in premarket trading. Japan's SoftBank Group fell 8.5%, while Tokyo Electron dropped 7.2%, Advantest declined 2.9%, Lasertec fell over 5%, Disco lost 4.7% and Renesas Electronics shed 5.9%.

CNBC reported the slide followed a weak session on Wall Street, where the Nasdaq Composite dropped 0.44% on Monday and Micron fell 3.9%. Over the weekend, China's ChangXin Memory Technologies, or CXMT, announced significant progress in developing a new chip architecture designed to increase memory density by packing more data into a smaller space, according to CNBC. CNBC reported that analysts broadly see CXMT as trailing the U.S. and South Korean memory leaders.

Vey-Sern Ling, senior equity advisor at UBP, said investors were "jittery and looking for excuses to take profit on AI-related stocks that have outperformed this year, especially memory stocks." Ling told CNBC that Chinese memory makers could potentially threaten the global demand-supply balance over time, but in the short run continue to face technology hurdles, especially for more advanced memory like HBM. CNBC also reported that a Monday post by Tesla and SpaceX chief Elon Musk added to the selloff; Musk said, "When China figures out how to manufacture a product, their ability to scale is often greater than the rest of the world combined."

Phillip Wool, chief market strategist at Rayliant Global Advisors, said CXMT's development marked a significant milestone for Chinese chipmakers, demonstrating their ability to overcome technology restrictions and potentially challenge established players sooner than expected, according to CNBC. He cautioned that the market reaction appeared disproportionate to the immediate competitive threat, CNBC reported.