Wall Street is mixed in early trading Tuesday with chipmakers getting hit again after a huge sell-off in South Korea. South Korea’s Kospi index plunged nearly 11 per cent Tuesday on heavy selling of computer chipmaking stocks that have been battered recently by fears that the AI boom may turn out to be a bubble. Trading was temporarily halted at times as Kospi dropped to its lowest level since April, closing 10.8 per cent lower at 6,023.66. Shares in chipmaker Samsung Electronics sank 13.4 per cent while those of SK Hynix tumbled 14.7 per cent. It was less dire in New York, where futures for the S&P 500 were unchanged, while futures for the Dow Jones Industrial Average rose 0.7 per cent. Still, futures for the technology-heavy Nasdaq slid 1 per cent with most chipmakers down anywhere from 2 per cent to 5 per cent. While those losses would be significant for most companies, many chipmakers and other AI-related companies have seen their market values double and triple since the beginning of the year. On Monday, SK Hynix’s U.S.-traded shares fell to below the US$149 initial public offering, or IPO, price for its Wall Street debut earlier this month, closing at US$143 a share. A key factor driving the selling of AI-related shares, analysts said, is the expectation that rising competition from Chinese AI startups and chipmakers might undermine gains for leading global companies whose shares have skyrocketed in the past months due to the AI frenzy. A 466 per cent jump in the price of Chinese memory chipmaker CXMT in its trading debut Monday underscored such concerns. CXMT raised at least US$8.6 billion in its IPO in Shanghai. But its shares dropped 4 per cent Tuesday. Tuesday’s chip stock sell-off also followed a report in the technology news publication The Information that China has begun mass production of homegrown deep ultraviolet, or DUV, chipmaking tools. Such equipment is used to print minute circuit patterns onto silicon wafers. “We believe the market was likely spooked by the progress of China’s chipmaking equipment capabilities, and was worried that this progress would threaten the competitive position of global chipmaking and chip equipment leaders,” said equity analyst Jing Jie Yu of Morningstar. “That said, we believe the sell-off today is largely a knee-jerk reaction and overdone,” he said. The dominant position of global chipmaking leaders is unlikely to be threatened meaningfully, he said. In U.S. trading, shares of Johnson & Johnson rose 3 per cent after the drugmaker agreed to pay US$5.5 billion to settle remaining lawsuits that claim its talc products caused ovarian cancer. J&J, which has been dealing with talc-related lawsuits for years, said in a statement that the settlement is conditioned on at least 95 per cent of remaining claimants participating. Coca-Cola Co. jumped 4.5 per cent after it beat Wall Street’s sales and profit targets. United Parcel Service also reported strong earnings for its most recent quarter but its shares rose a modest 1 per cent. Back in Asia, Tokyo’s Nikkei 225 dropped 4 per cent to 62,364.92. The Taiex in Taiwan skidded 4.7 per cent, with shares of leading chipmaker TSMC, or Taiwan Semiconductor Manufacturing Co, falling 3 per cent. Hong Kong’s Hang Seng gained 0.4 per cent to 25,310.85, while the Shanghai Composite index lost 1.2 per cent to 3,813.31. Australia’s S&P/ASX 200 gained 0.6 per cent to 8,947.80. India’s Sensex edged 0.1 per cent lower. At midday in Europe, Germany’s DAX and the CAC 40 in Paris were each up less than 0.1 per cent, while Britain’s FTSE 100 picked up 0.5 per cent. Oil prices extended their declines as the U.S. and Iran refrained from strikes in their on-again, off-again war. Regional officials said Monday that mediators had made progress in getting the U.S. and Iran back to negotiations after they paused attacks. Brent crude, the international standard, fell US$1.35 to US$84.52 a barrel. It was trading around US$72 per barrel before the Iran war began in late February. U.S. benchmark crude oil lost 81 cents to US$81.80 a barrel. Chan Ho-him And Elaine Kurtenbach, The Associated Press
