Asian stock markets, especially technology shares, faced a significant downturn on Tuesday after reports indicated that a Chinese state-backed company had begun mass production of immersion deep ultraviolet (DUV) lithography systems. This technology, previously dominated by Dutch firm ASML, allows for etching microscopic circuits onto silicon wafers crucial for AI chips and consumer electronics. Although DUV is less advanced than ASML's extreme ultraviolet (EUV) lithography, which remains restricted from sale to China by U.S. export controls, the news still sparked a broad sell-off.
Major chipmakers were heavily impacted. In South Korea, Samsung shed $13.4, and SK Hynix fell $7.5, trading approximately $13 below its initial public offering price of $149. The Kospi index plummeted $10.8, marking its worst day since early March. In Japan, the Nikkei 225 also saw steep losses of $4, with Kioxia slumping more than $18.3, SoftBank losing $4.5, Advantest diving $10, and Tokyo Electron shedding $11. The Philadelphia Semiconductor Index itself plunged $4.5 on Wall Street, extending a four-session losing streak, with Micron dropping $8.9, AMD $8.2, and Intel $5.9.
Adding to the market anxiety were investor concerns regarding the sustainability of AI investments. Reports that NVIDIA's AI-related funding commitments had surpassed $750 billion raised questions about whether investment in AI infrastructure was outpacing future demand. Analysts suggested that the decline was less about a collapse in semiconductor fundamentals and more about a "momentum reversal" driven by technical market factors and a reduced willingness among investors to capitalize on AI promises at any price, especially after the "AI trade" had behaved like a "flywheel" for several years. Hong Kong and Chinese tech stocks, however, showed more resilience, with the Hang Seng flat and the Shanghai Composite down only $1.2.
The broader market sell-off saw the SK Hynix ADR fall $8.98, marking its third consecutive session of steep losses. This decline pushed the Asian tech-heavy indices, such as Japan's Nikkei 225 and South Korea's Kospi, significantly lower, with the Kospi down over $30 from its all-time highs last month. Other affected companies included Qualcomm, Marvell Technology, and ASML, which shed more than $8 in Amsterdam. Traders are now awaiting earnings reports from SK Hynix, Samsung, Kioxia, and U.S. tech giants like Microsoft, Meta, Apple, and Amazon for further market direction.
