CEOs of Broadcom and Intel have flagged investment costs and uncertain returns as potential constraints to expanding AI infrastructure.
Chinese company CXMT has reported advancements in next-generation DRAM technology, increasing competitive pressure.
Retailer sentiment weakened for Micron, AMD and DRAM as semiconductor stocks continued their downward trend.
U.S. semiconductor stocks extended their sell-off as concerns over AI infrastructure financing and intensifying Chinese competition in the memory chip market weighed on investor sentiment.
Micron Technology (MU) fell 2.7% overnight Monday, while SanDisk (SNDK) fell 3.3%, Intel (INTC) fell 2.5% and Advanced Micro Devices (AMD) lost 1.7%.
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These declines follow sharp declines during the regular session, when SanDisk plunged 6%, marking the second-largest decline in the Nasdaq-100. The iShares Semiconductor ETF (SOXX) also ended lower for a fifth consecutive session.
Shares of Samsung Electronics and SK Hynix in Seoul fell about 5 percent each on Tuesday, dragging South Korea’s benchmark KOSPI index down as much as 4.8 percent.
AI funding woes weigh on chip stocks
Investor concerns about the sustainability of AI infrastructure spending have intensified after Broadcom (AVGO) CEO Hock Tan warned that access to capital could become a bigger constraint to AI development than shortages of chips or electricity.
Speaking at the DBS Asia Future Forward conference in Singapore on Monday, Tan highlighted the enormous funding needs associated with building AI infrastructure.
“If there’s one challenge at the forefront, it’s capital and the cost of capital, and then the other part is longer term, people want to see the return on investment,” he said, according to a CNBC report.
Intel CEO Lip-Bu Tan echoed these concerns, pointing to rising borrowing costs and questions about the ROI of AI infrastructure spending.
These comments added to investor concern over whether AI companies can maintain their massive spending commitments and generate sufficient revenue to justify their investments.
China’s CXMT adds to memory chip concerns
Memory chip stocks came under additional pressure after China’s ChangXin Memory Technologies (CXMT) announced progress on a next-generation DRAM architecture that could intensify competition with established manufacturers.
CXMT has made progress on a so-called 4F2 memory cell structure designed to increase storage density by fitting more memory cells onto a chip. The company plans to introduce a server memory product based on this technology by the end of 2026.
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