AI worries send South Korea's Kospi down 5.5%

South Korea's Kospi closed down 5.5% on Tuesday as technology stocks fell on renewed concern about the artificial intelligence investment boom.

The selling followed comments from Broadcom chief executive Hock Tan, who told a conference in Singapore that many investors had little understanding of what they were buying and compared parts of the AI frenzy to a casino.

The International Monetary Fund also warned of an AI correction, saying evidence suggested AI capabilities might be delivered with lower investment or that potential economic gains might be smaller than expected.

Chip stocks were among the hardest hit in Asia. South Korea's SK hynix and Samsung fell, while Japan's Kioxia dropped more than 13%. Japan's Nikkei 225 lost 1.8%.

Reports that China's CXMT had made progress on technology to increase memory chip density added to pressure on rival chip companies. Chris Weston of Pepperstone said China was narrowing the competitive gap with US companies across AI models, robotics, memory and other parts of the technology supply chain.

Outside the technology sector, lower oil prices helped support some shares. Brent crude was down 1.3% at $105.31 a barrel around 1330 GMT, while West Texas Intermediate fell 0.9% to $92.92.

In early New York trading, the Nasdaq Composite was down 0.3%, the S&P 500 was nearly flat and the Dow was up 0.7%. European shares were mostly higher in afternoon trading.