Chip stock selloff deepens despite TSMC’s record profit

Record earnings from TSMC Taiwan Semiconductor Manufacturing Company Limited ↘ 1.80% did not stop a global selloff in chip stocks on Thursday, October 15. Hotter US inflation data raised bets on more Federal Reserve rate hikes and added to doubts about how the AI buildout is being paid for. According to CNN, the Philadelphia Semiconductor Index PHLX Semiconductor Sector Index ↘ 0.88% sank 2.5% and fell for a seventh straight day after heavy losses in Taiwan, South Korea and Japan. The index is now down more than 20% from its June peak.yahoo.com

A beat that didn't help

TSMC said third-quarter net income rose 68.7% to NT$763.06 billion on revenue of NT$1,494.24 billion, which was up 50.9% from a year earlier, according to the company's results filing. The profit set a record and topped the LSEG SmartEstimate of NT$746.3 billion, Reuters Thomson Reuters Corporation ↗ 2.36% reported. Even so, TSMC's shares closed 2% lower. On the earnings call, CEO C.C. Wei warned that rising component prices and economic uncertainty were weighing on demand in some markets. Reuters said TSMC's cautious note on 2027 hurt sentiment.uk.marketscreener.com+3

Asia leads the rout

South Korea's Kospi fell 7.57% to 5,554.22. That was its lowest close since April 7 and its seventh losing session in a row. The drop set off a 20-minute circuit breaker, Korea JoongAng Daily reported. Samsung Electronics fell 9.48% and SK hynix ↘ 0.98% fell 11.06%. Foreign investors sold a net 3.62 trillion won of shares, their eighth straight day of net selling. Japan's Nikkei 225 closed 4.9% lower. In Europe, ASML ↗ 0.45% and STMicroelectronics ↘ 0.64% fell sharply, even though ASML had reported strong results a day earlier, Morningstar ↗ 2.59% reported. Reports that Chinese memory maker CXMT has made progress on advanced chips added to worries about competition.global.morningstar.com+2

Rates and AI debt

The selloff picked up after US consumer prices rose 3.7% from a year earlier in September, above the 3.6% economists expected. On Thursday, data showed producer prices rose the most in four and a half years. Reuters reported that heavily indebted CoreWeave ↗ 5.94% fell again after a 15% drop on Wednesday, and that its bond yields hit record highs. Nvidia ↘ 1.84%, Micron ↗ 1.87% and AMD Advanced Micro Devices, Inc. ↘ 1.50% also lost ground. The Nasdaq Composite cut its earlier losses as some investors bought the dip. Investor's Business Daily News Corp ↗ 1.88% noted that a seven-day slide would match the semiconductor index's losing streak from May 2025.yahoo.com+3

"The repricing of CoreWeave's debt suggests that investors are becoming less willing to finance AI infrastructure growth at any cost," Charu Chanana, chief investment strategist at Saxo, said, according to Reuters.uk.marketscreener.com