Financing concerns and China’s push into advanced memory technology deepen pressure on semiconductor stocks.
- Broadcom and Intel CEOs flagged capital costs and uncertain returns as potential constraints on AI infrastructure expansion.
- China’s CXMT reported progress on next-generation DRAM technology, raising competitive pressure.
- Retail sentiment weakened for Micron, AMD and DRAM as semiconductor shares continued their downward trend.
U.S. semiconductor stocks extended their sell-off as concerns about AI infrastructure funding and intensifying Chinese competition in the memory-chip market weighed on investor sentiment.
Micron Technology (MU) fell 2.7% in overnight trading late Monday, while SanDisk (SNDK) dropped 3.3%, Intel (INTC) declined 2.5% and Advanced Micro Devices (AMD) lost 1.7%.
The declines followed sharp drops in the regular session, when SanDisk plunged 6%, marking the second-largest decline in the Nasdaq-100. The iShares Semiconductor ETF (SOXX) also ended lower for a fifth consecutive session.
Samsung Electronics and SK Hynix shares in Seoul fell around 5% each on Tuesday, dragging South Korea’s benchmark KOSPI as much as 4.8%.
AI Funding Concerns Weigh On Chip Stocks
Investor concerns about the sustainability of AI infrastructure spending intensified after Broadcom (AVGO) CEO Hock Tan warned that access to capital could become a bigger constraint on AI expansion than shortages of chips or electricity.
Speaking at the DBS Asia Future Forward Conference in Singapore on Monday, Tan highlighted the enormous financing requirements associated with building out AI infrastructure.
“If there’s any challenge in the front, it’s capital and the cost of capital, and then the other part is in the longer run, people want to see the ROI,” he said, according to a CNBC report.
Intel CEO Lip-Bu Tan echoed those concerns, pointing to rising borrowing costs and questions about the returns on investment from AI infrastructure spending.
The comments added to investor anxiety over whether AI companies can sustain their massive spending commitments and generate sufficient revenue to justify the investments.
China’s CXMT Adds To Memory Chip Concerns
Memory-chip stocks faced additional pressure after China’s ChangXin Memory Technologies (CXMT) reported progress on a next-generation DRAM architecture that could intensify competition with established manufacturers.
CXMT has made progress on a so-called 4F2 memory-cell structure designed to increase storage density by fitting more memory cells onto a chip. The company plans to introduce a server-memory product based on the technology by the end of 2026.
The development threatens to intensify competition for Micron, Samsung Electronics and SK Hynix, which are also pursuing advances in memory-chip density.
Retail View On Chip Stocks
On Stocktwits, the retail sentiment for MU shifted to ‘neutral’ from ‘bullish’ the previous day, while the sentiment for AMD shifted to ‘bearish’ from ‘neutral.’ DRAM’s sentiment flipped to ‘bearish’ from ‘bullish.’ The sentiment remained ‘bearish’ for SNDK, INTC and SOXX.
“MU is starting to find itself oversold in the short-term,” a trader said, noting that the stock has fallen below its rising trendline after failing to break through resistance.
The 50-day moving average could offer support, although historical evidence is limited. With semiconductor stocks trending lower, the investor said another rally from recent lows “wouldn’t surprise me,” as traders rotate back into beaten-down, oversold stocks.
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