SEOUL – South Korean chip stocks slumped on July 28, with Samsung Electronics and SK Hynix falling as much as 9.5 per cent and 10.9 per cent, respectively, as investors dumped AI-related bets amid mounting concerns over financing risks tied to AI infrastructure spending and intensifying competition from China.SK Hynix’s US-listed shares had already slumped overnight, closing at US$143.02, below their initial public offering price of US$149.The benchmark KOSPI was trading down 7.3 per cent as at 0032 GMT (8.32am Singapore time).The sector-wide sell-off followed several developments that renewed doubts about the sustainability of the artificial intelligence-driven semiconductor rally.SK Hynix, a key supplier of high-bandwidth memory (HBM) chips to Nvidia, has been one of the biggest beneficiaries of the AI spending boom, making its shares particularly sensitive to shifts in investor sentiment towards the sector.Analysts said the sell-off reflected a combination of concerns over AI infrastructure financing, China’s technological advances and rising competition from Chinese firms.A Wall Street Journal report that Nvidia could provide a roughly US$250 billion (S$323 billion) financial backstop for an OpenAI data centre project sent Nvidia shares down nearly 5 per cent, with investors questioning the extent to which the AI chip leader may be financing its own customers.Separately, investors were unsettled by reports of China’s progress in developing home-grown deep ultraviolet lithography tools, a potential step towards reducing the country’s reliance on Western semiconductor equipment despite US restrictions on Chinese access to imported chip technology.Adding to the caution, the growing popularity of low-cost Chinese open-source AI models such as Kimi K3 raised questions about whether future AI workloads could prove less intensive than previously expected – meaning less demand for advanced AI chips and HBM.Meanwhile, Chinese memory-chip maker CXMT’s strong stock-market debut fuelled concerns about intensifying competition in the global memory industry.The listing came after reports that Apple had been lobbying the Trump administration to allow the use of Chinese-made chips in some of its products, further unsettling investors already concerned about China’s growing technological capabilities. REUTERS