Advances in chips, chipmaking equipment and AI models disrupt stocks by threatening the edges of existing leaders, investors say
China’s increasing clout in the global semiconductor supply chain is accelerating the unravelling of the artificial-intelligence trade, as expectations grow that the Asian nation will challenge foreign tech juggernauts by supplying the world with cheaper alternative products.
US$9.8 billion stock offeringof ChangXin Memory Technologies (CXMT) in Shanghai provided the Chinese maker of dynamic random access memory (DRAM) chips with equity funding to finance its expansion of market share home and abroad, sending shares of rivals SK Hynix of South Korea and US-based Micron Technology tumbling.
dominance of Dutch manufacturer ASML. The episodes add to the unwinding of the frenzy on global AI and technology stocks, which have already been taking a beating amid growing jitters over whether massive capital expenditure will generate cash flows to justify their lofty valuations.
China’s advances on the technological frontier should translate to more supply of low-cost substitutes that will reshape the industry by eroding the advantages and margins of existing leaders, according to analysts.
“The message for global investors is that AI is becoming a two-sided trade,” said Gary Dugan, CEO of The Global CIO Office. “US platforms and chip leaders still command the earnings pool, but China is creating investible competitors that can compress future margins and alter supply-chain assumptions.”
Adding to those worries, China is also closing its gap with the US in AI model development. Kimi K3, the 2.8-trillion-parameter open-weight model recently released by start-up Moonshot AI, almost matches the most sophisticated models from OpenAI and Anthropic in performance.