Global semiconductor stocks experienced a sharp decline as Micron Technology shares fell more than 7% and Intel crashed nearly 8% on Tuesday, with investors turning cautious on chip stocks despite strong Samsung earnings. According to The Economic Times, the selloff hit several chip names, with Intel falling 3.3% and Marvell Technology dropping 4.5% amid broader weakness in the sector. The pressure came after a sharp fall in Asian chip stocks earlier in the day, led by Samsung Electronics and SK Hynix, with Samsung shares tumbling 6.9% in Seoul even after the company forecast a 19-fold jump in second-quarter operating profit. The weakness spread across South Korea's market, with the KOSPI closing down 4.9% after falling as much as 8.2% intraday, and circuit breakers were triggered during the session as volatility in semiconductor stocks intensified. As reported by Investing.com, the Philadelphia Semiconductor Index (SOX) fell roughly 6% on the day and has now lost around 15% over four trading sessions, though it remains up roughly 73% year to date.
As reported by The Financial Express, Samsung Electronics reported preliminary second-quarter operating profit of 89.4 trillion won (approximately ₹89.4 trillion), representing a 19-fold increase from the previous year. The company estimated revenue would likely rise 129% to 171 trillion won from a year earlier, up from 133.9 trillion won in the previous quarter. However, according to The Financial Express, Samsung's results missed revenue estimates, contributing to the market's negative reaction despite the record profit figures. "Samsung posted better-than-expected earnings despite bonus-related provisions, as memory prices rose sharply," said Lee Min-hee, an analyst at BNK Investment & Securities. Analysts estimate that without bonus-related costs, Samsung's operating profit would have exceeded 100 trillion won. A full financial statement will be released by the company on July 30, which will include its net profit figure and a break-up of the performance of its various divisions.
As reported by The Financial Express, memory chip prices continued to climb during the quarter as AI spending broadened beyond high-bandwidth memory (HBM) into conventional DRAM and NAND products. Citi Research confirmed that DRAM prices climbed 44% quarter-over-quarter and NAND flash prices rose 53% during the second quarter. Counterpoint Technology Market Research's Tom Kang noted that "our monthly checks into the memory prices of consumer products, mobile products, servers all indicated that prices are still rising," explaining that the price spike will continue through at least this quarter. The rise has been driven by strong AI demand, which has expanded beyond high-bandwidth memory chips into conventional chips used in smartphones, PCs and servers. Limited supply has also kept prices elevated, with customers increasingly signing longer-term supply contracts. The ongoing memory shortage has fueled a massive rally in memory chipmakers' shares, with Samsung Electronics, SK Hynix and Micron soaring 158%, 273% and 242% respectively this year, driving all three companies' market valuations above $1 trillion.
As reported by The Financial Express, investors are becoming increasingly cautious about AI-related stocks after months of rapid gains, with concerns that spending on AI chips and data centres may not continue at the same pace. "It's been 'dragged down by concerns that AI infrastructure spending can't keep growing at the pace that has been driving memory prices,' Wong said. Some analysts said Samsung's strong earnings had already been factored into its share price after a steady rally over the past year. "Samsung's strong earnings were widely expected and had largely been priced in after its shares rallied ahead of the results," Albert Yong, a managing partner at Petra Capital Management, told Reuters. According to Investing.com, the Silicon Data Token Expenditure Index has dropped, raising concerns about AI demand and pricing power. While memory has historically been characterized by boom-and-bust cycles, some analysts argue the current sustained growth is becoming more structural as AI demand outpaces the industry's ability to expand production. Looking ahead, analysts said the biggest threat to Samsung's momentum is any slowdown in AI infrastructure investment, with investors seeking clearer evidence that breakthroughs in AI services will translate into faster growth in cloud computing and related AI revenues.
According to The Financial Express, adding to the changing narrative, China's Zhipu AI, one of the country's leading artificial intelligence startups, is exploring a custom AI chip as demand for its open-source GLM models surges. This development highlights the rise of lower-cost AI ecosystems built around domestic hardware rather than cutting-edge US chips. The shift comes just weeks after SpaceX's blockbuster IPO and amid elevated valuations across AI-related stocks. Investors are increasingly questioning whether the next phase of AI will require ever more GPUs and high-bandwidth memory, or whether more efficient models will reduce demand for the infrastructure that has powered the AI rally. Sentiment was also hit by a Reuters report that Chinese startup DeepSeek is developing its own AI chip, aimed at inference tasks and could reduce DeepSeek's reliance on Nvidia and Huawei chips, as reported by The Economic Times. The project is still at an early stage but reflects a broader push by Chinese AI companies to build more of their own hardware as US export controls limit access to advanced chips.
According to The Financial Express, Samsung's results included provisions for employee bonuses after the company reached a wage agreement with workers in May, with semiconductor employee bonuses now linked to operating profit. "A lot of negative news has been building up, so it looks like everyone wants a piece of that profit. The labor union wants it, and the Korean government wants it," Kang told CNBC. However, investors remained focused on rising expenses and weaker profitability in Samsung's foundry and logic chip businesses. Kang also noted that Samsung's plan to build new semiconductor plants in southern South Korea is weighing on investor sentiment because the region lacks the existing chipmaking infrastructure found elsewhere in the country. While Samsung's memory business is expected to post another quarter of strong earnings, analysts said losses at its foundry and logic chip businesses are likely to widen because bonus expenses are allocated across the semiconductor division.
