Samsung and Kioxia slide as AI doubts and China chip fears hit tech stocks

Technology shares fell on Tuesday as investors worried about how long the artificial intelligence spending boom can last and whether Chinese chipmaking advances could challenge Western suppliers.

South Korea’s Samsung Electronics dropped more than 12 percent, Japanese memory chipmaker Kioxia fell 18 percent and Taiwan’s TSMC slid 3.0 percent. The moves followed losses in major US semiconductor stocks on Monday.

The decline came after tech news outlet The Information reported that a Chinese state-backed company was making immersion deep ultraviolet lithography machines. These machines etch tiny circuits onto silicon to make microchips used in AI and consumer electronics.

Deep ultraviolet technology is less advanced than extreme ultraviolet lithography, a field dominated by Dutch company ASML. US trade restrictions ban the sale of ASML’s extreme ultraviolet machines to China, but China is also reportedly in the early stages of producing its own version.

Angela Harmantas of Proactive Investors said China’s reported domestic lithography advances were unsettling investors who had assumed China faced tighter constraints. She also said the sell-off reflected wider valuation concerns after sharp gains in AI-linked shares.

Analysts also pointed to debt risks as big technology companies borrow to fund AI infrastructure. Stephen Innes of SPI Asset Management said the AI buildout was entering a more difficult phase as the gap between capital spending and internal cash generation narrows.

Earnings expectations are another pressure point. Results are expected from companies including SK hynix, Samsung Electronics and SoftBank Group. Dilin Wu of Pepperstone told Bloomberg News that the bar for technology earnings was extremely high and that traders appeared to be reducing exposure before results.