Global chip selloff deepens as China’s STAR 50 tumbles

A punishing selloff in semiconductor stocks has spread across global markets this week, driven by a convergence of catalysts that have shaken investor confidence in the AI-fueled chip boom: an earnings miss from memory giant SK Hynix ↘ 2.60%, the blockbuster IPO of China's ChangXin Memory Technologies, and mounting doubts over whether artificial intelligence spending can sustain its current trajectory.

The Nasdaq Composite fell 1.45% on Wednesday as chip stocks cratered alongside a surge in oil prices tied to renewed U.S.-Iran tensions. In Asia, the damage was even more severe. South Korea's Kospi suffered its worst two-day decline on record, with SK Hynix plunging more than 14% and Samsung Electronics dropping over 13%. China's STAR 50 Index tumbled more than 6% on Thursday to its lowest since April, having lost nearly 29% in July after surging about 75% in the prior three months, according to Bloomberg.bloomberg+1

SK Hynix Earnings Disappoint Despite Record Numbers

SK Hynix reported second-quarter revenue of 79.32 trillion won, up 257% year-over-year and 51% sequentially — record figures by any measure. Operating profit surged 557% to 60.54 trillion won. Yet both numbers fell short of analyst expectations of 84 trillion won in revenue and 64.22 trillion won in operating profit, according to CNBC.ad-hoc-news+1

The miss triggered immediate selling across the memory sector. Micron Technology ↘ 9.94% fell nearly 7% in overnight trading, while SanDisk Western Digital Corporation ↘ 0.32% slumped 8%. In Japan, Kioxia shed 38.74% over seven trading sessions, leaving the stock trading nearly 47% below its 50-day moving average.stocktwits+1

CXMT's Debut Raises Competitive Fears

Adding to the pressure, CXMT Corp debuted on Shanghai's STAR Market on July 27 after raising approximately $8.6 billion in Asia's largest semiconductor IPO this year, according to Reuters. Shares surged nearly 470% on the first day of trading. The massive capital injection positions the Chinese DRAM and NAND manufacturer to scale production rapidly, threatening to flood the market and compress margins for established players.reuters+1

CXMT bucked the broader trend on Wednesday, with its shares rising 3.7% even as the CSI All Share Semiconductor Index plunged 5.7%.economictimes

Rotation Accelerates as AI Questions Mount

The selloff reflects a broader reassessment of AI-related hardware investments. Investors have rotated into defensive sectors — health care and financial stocks hit fresh intraday highs earlier in the week — while dumping the chip names that led markets higher for much of the past year. Micron CEO Sanjay Mehrotra sold $37.3 million worth of shares on July 24, adding to roughly $44.2 million in insider sales across the company during July alone.ibtimes+1

With the Federal Reserve's interest rate decision, earnings from Microsoft ↘ 0.71% and Meta Platforms ↘ 1.31%, and Kioxia's quarterly report all due within days, investors are bracing for continued volatility as the market tests whether the AI spending boom has begun to moderate.ad-hoc-news+1