Asia report: Nikkei, KOSPI post big losses as chipmakers drop

(Sharecast News) - Asian stock markets were mixed on Tuesday, though indices in Tokyo and Seoul suffered heavy losses on the back of fears of rising competition from the Chinese memory-chip sector and concerning comments regarding AI spending from the boss of Broadcom.

The Nikkei 225 dropped 1.8% to a two-week low with heavy losses from Japanese chipmaker Kioxia, tech investor SoftBank and semiconductor manufacturing equipment giant Tokyo Electron.

The KOSPI, meanwhile, sank 5.5% with heavyweight constituents SK Hynix and Samsung Electronics dropping 10% and 7% respectively.

Reports that Chinese memory-chip group CXMT is making breakthroughs on a new cell architecture hammered shares of both SK Hynix and Samsung Electronics, which are also working on the same dynamic random-access memory (DRAM) development. A company spokesperson reportedly said at an event in Shanghai that the new design to increase memory density will be available by year-end.

"This is a highly competitive field, with rivals Samsung Electronics and SK Hynix also hard at work at this edge of innovation. It's raised big questions yet again about valuations based on bumper earnings projections and the scarcity of products, given the progress of rivals," said Susannah Streeter, chief investment strategist at Wealth Club.

Meanwhile, speaking at an event in Singapore, Broadcom chief executive Hock Tan compared AI investors to gamblers in "a casino", claiming that many "have no clue what they are investing in" - unsettling the market that is already questioning the sustainability of current AI investment.

Sentiment was further hit by concerns over elevated bond yields, which have raised questions over the economics of the vast spending programmes underpinning the AI boom. Analysts said investors were becoming less willing to pay premium valuations for future growth as financing costs remain high.

Stocks in China fared better, with the Hang Seng and Shanghai Composite both finishing in positive territory (+0.3% and +0.1% respectively) after erasing earlier losses. Stocks in Mumbai and Singapore also rose, with the Sensex up 1.5% and the Strait Times Index 0.3% higher.