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Chip stocks around the world just had one of their worst trading days in years.
On Tuesday, July 28, semiconductor and memory chip stocks fell sharply across Asia, Europe, and the United States. The drop wiped out significant market value in a single session and extended losses that started the day before on Wall Street.
The selloff hit hardest in South Korea, home to two of the world’s biggest memory chip makers.
- Samsung Electronics closed 13.4% lower, its worst single-day drop in almost two decades.
- SK Hynix fell 14.7% in Seoul trading.
- Samsung and SK Hynix together make up nearly half of the KOSPI index, which closed down 10.8%. That is its biggest one-day decline since March.
The damage spread across the rest of Asia too. Japan’s Kioxia Holdings, a major flash memory maker, dropped 18.3%. Taiwan’s MediaTek fell almost 10%, and TSMC closed nearly 3% lower. In China, the ChiNext 300 index fell 6.49%, and the Hang Seng China Semiconductor Chips Index dropped 7.02%.
European chipmakers were not spared either. ASML fell more than 8% on Monday after a report that a Chinese company had built a competing lithography machine, an area ASML has long dominated.
What Triggered the Selloff
The selloff traces back to Monday, when Nvidia announced two major financing moves.
At first, Nvidia agreed to a $500 billion AI memory chip supply deal with SK Hynix. Secondly, the company pledged a $250 billion guarantee to help OpenAI lease a 10-gigawatt data center campus in Ohio. OpenAI does not currently hold an investment-grade credit rating.
Investors read this as a sign that AI spending increasingly depends on complex financing arrangements rather than straightforward revenue growth. That raised fresh doubts about how sustainable the AI spending boom really is.
Concerns about China added to the pressure. Reports indicated that Chinese manufacturers are expanding their own chip production capacity using domestically made equipment. Analysts said this raises the risk of future oversupply and pricing pressure in the memory chip market, an area where South Korean and US firms currently lead.
On Monday alone, more than $1 trillion was wiped off the value of US stocks, with over half of that loss concentrated in just six memory-related companies. Nvidia itself closed down nearly 5% at $196.51.
US Markets Follow the Drop
The weakness carried into Tuesday’s premarket trading in the United States.
- Nasdaq 100 futures fell 0.9%.
- S&P 500 futures dropped 0.2%.
- Nvidia was down about 1.2%.
- Intel and AMD each fell more than 3%.
- Micron dropped nearly 5%.
SK Hynix’s US-listed shares, which began trading on the Nasdaq earlier this month, closed 7.5% lower overnight. That pushed the stock below its $149 IPO price for the first time since its debut.
What Can Happen Next
The Federal Reserve began a two-day policy meeting on Tuesday, with a rate decision due Wednesday. Markets widely expect the Fed to hold rates steady, though a hike has not been ruled out.
Big Tech earnings will also be in focus this week. Microsoft, Meta Platforms, and Amazon are all scheduled to report results in the coming days. Investors will be watching closely for updates on AI spending plans, especially after Alphabet’s own spending guidance unsettled markets last week.
