Broadcom CEO’s ‘casino’ jab triggers Kospi chip rout

Broadcom ↗ 0.73% Chief Executive Hock Tan said Monday that some artificial-intelligence investors are behaving like casino gamblers, and chip stocks around the world fell over the next two sessions. Investors also weighed his warning that money, rather than chips, will now hold back the AI buildout.marketwatch+1

Tan spoke on a semiconductor panel at DBS's first Asia Future Forward Conference in Singapore, where he shared the stage with Intel CEO Lip-Bu Tan. "A lot of investors have no clue what they're investing in, but set very extreme expectations, only to find out that it's almost like they are in a casino gambling," he said, according to Reuters. He made the comment when asked how cheaper AI models would affect the market.investing+1

Selloff spreads to Asia

South Korea's Kospi fell as much as 7.4% on Tuesday. Samsung Electronics dropped as much as 9% and SK Hynix ↘ 3.19% as much as 10.8%. Trading on the Kospi was briefly halted as the selling picked up. Japan's Nikkei 225 fell as much as 2.9%, and Japanese memory maker Kioxia sank more than 14%. On Wall Street on Monday, the Nasdaq Composite lost 0.7% while the S&P 500 ended slightly lower.yahoo+2

Tan's remarks were not the only pressure on the sector. Reports said China's CXMT was catching up in memory chips and Huawei was gaining in AI accelerators. The International Monetary Fund also warned that a crash in AI stocks could threaten financial stability. Recent losses have built on a selloff on Oct. 8, which followed reports that OpenAI's annualized revenue was below what it had earlier signaled to investors.finance.yahoo+2

Capital as the bottleneck

Tan said Broadcom is getting past shortages of wafers and memory, but that "capital may well be the most severe constraint" from here. Lip-Bu Tan agreed: "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".inc+2

The Broadcom chief also questioned how companies are spending on AI. "Your parents give you $10 of tokens, you finish it in 10 minutes and you haven't learned anything," he said. "That's what happening in enterprises today".nypost+1

Bullish or bearish?

Some commentators said the market misread him. Tan said OpenAI's roughly $50 billion in annualized revenue in September points to a viable business model. He added that OpenAI is "still losing money because they are spending a lot on training". "Broadcom CEO Hock Tan was actually incredibly bullish on AI demand and OpenAI. He was only criticizing the AI stock SELLERS," newsletter author Tae Kim wrote on X.bloomberglinea+2

Broadcom is also helping to finance its own customers. It has agreed to provide up to \$42 billion in funding for Anthropic's infrastructure, according to prospectus documents seen by Reuters. The cost of insuring Broadcom's debt against default has reportedly hit a record high. DBS CEO Tan Su Shan said the market's repricing of AI risk is "healthy".businessinsider+2