Global Chip Stocks Slide as KOSPI Selloff, AI Concerns and Iran Tensions Shake Markets
Global semiconductor stocks moved sharply lower on Friday as investors reacted to a major selloff in South Korean equities, rising geopolitical uncertainty, and growing concerns that the artificial intelligence rally may be overheating.
Several leading chip companies recorded steep losses during trading:
- Micron fell nearly 5%
- Nvidia declined 3.5%
- Broadcom dropped 3%
- AMD slipped 3.7%
- Intel plunged around 6%
- ASML lost approximately 4.5%
The declines reflected broader weakness across global technology and semiconductor sectors.
South Korea’s KOSPI Drops More Than 6%
Market pressure intensified after South Korea’s KOSPI index fell over 6%, retreating sharply from previous record highs above 8,000.
The downturn was led by heavy selling in Samsung Electronics and SK Hynix, the two largest companies within the index.
Samsung shares dropped 8.6% after the company’s labor union confirmed plans for an 18-day strike beginning May 21, raising concerns about disruptions across the global semiconductor supply chain.
Meanwhile, SK Hynix declined 7.7%.
Combined, Samsung and SK Hynix now represent a record 42.2% of the KOSPI index, highlighting their outsized influence on South Korean markets.
European Semiconductor Stocks Also Decline
Weakness spread beyond Asia into European chip manufacturers.
Major losses included:
- ASML: -4.6%
- ASM International: -4.2%
- BE Semiconductor: -2.7%
The synchronized decline across regions reflected broader concerns over technology valuations and macroeconomic risks.
UBS Warns the AI Trade Could Be Overheating
A new report from UBS suggested that enthusiasm surrounding artificial intelligence stocks may be reaching excessive levels despite strong profitability among major companies.
According to UBS analysts, semiconductor firms linked to AI have become the primary drivers behind recent equity market gains, even as inflation concerns and geopolitical risks continue increasing.
The bank described April’s surge in U.S. stocks as an unusually extreme event, calling it a “2.8 standard deviation move” compared with the past 25 years.
UBS also noted that mega-cap technology stocks have become heavily crowded trades, increasing vulnerability to sudden corrections.
AI Semiconductor Giants Continue Expanding Globally
Despite valuation concerns, AI-related semiconductor firms continue experiencing significant growth.
UBS highlighted that TSMC and Samsung have surpassed $1 trillion in market capitalization, while AI companies outside the United States are projected to reach record profitability levels by 2027.
The report forecasts that developed-market semiconductor companies will produce record cash-flow returns this year.
Among them, Nvidia is expected to achieve an estimated 82% CFROI (Cash Flow Return on Investment).
However, UBS warned that maintaining such elevated profitability over long periods has historically been extremely rare.
According to the bank, only 0.02% of global companies have sustained CFROIs above 50% for a decade.
U.S.-China Talks and Iran Conflict Increase Market Uncertainty
Investors also monitored ongoing discussions between President Donald Trump and Chinese President Xi Jinping during summit meetings in Beijing.
Both leaders reportedly agreed on maintaining access through the Strait of Hormuz, a crucial shipping route disrupted following conflict involving Iran and U.S.-Israeli military action earlier this year.
The geopolitical backdrop remains uncertain.
President Trump stated Thursday that his patience with Iran was diminishing following reports that Iranian personnel seized a vessel near the United Arab Emirates.
Although the U.S. paused strikes on Iran last month, sanctions and blockades remain in place.
Negotiations aimed at reducing tensions have stalled, with Iran refusing to abandon its nuclear program or relinquish enriched uranium reserves.
Rising Geopolitical Risks Add Pressure to Global Chip Stocks
With concerns surrounding AI valuations, labor disruptions, inflation, and escalating geopolitical tensions, investors continued reducing exposure to higher-risk technology sectors.
The semiconductor industry remains one of the strongest long-term beneficiaries of artificial intelligence growth, but recent volatility suggests markets are becoming increasingly sensitive to signs of overvaluation and global instability.
