SynopsisSouth Korean chip stocks experienced sharp declines on Tuesday. Major companies like Samsung Electronics and SK Hynix saw significant drops. Investors scaled back artificial intelligence-related bets due to spending sustainability worries. Concerns over China's semiconductor advancements also fueled market unease. This selloff reflects a broader reassessment of AI valuations and future demand.ANISK Hynix, a key supplier of high-bandwidth memory (HBM) chips used by Nvidia for advanced AI computing systems, has been among the biggest beneficiaries of surging demand for AI infrastructure.South Korean semiconductor stocks tumbled on Tuesday, with major chipmakers Samsung Electronics and SK Hynix witnessing sharp declines as investors scaled back artificial intelligence-related bets amid growing concerns over the sustainability of AI infrastructure spending and rising competition from China, Reuters reported.Samsung Electronics shares fell as much as 9.5%, while SK Hynix dropped as much as 10.9%. The broader benchmark KOSPI was trading 7.3% lower as of 0032 GMT, reflecting a broad-based selloff across the technology sector.According to Reuters, the decline followed a series of developments that renewed investor concerns about the durability of the AI-driven semiconductor rally, which has lifted chip stocks globally over the past year.SK Hynix, a key supplier of high-bandwidth memory (HBM) chips used by Nvidia for advanced AI computing systems, has been among the biggest beneficiaries of surging demand for AI infrastructure. However, its strong exposure to the AI theme has also made the stock more vulnerable to shifts in investor sentiment.The company’s U.S.-listed shares had already come under pressure overnight, closing at $143.02, below their initial public offering price of $149.Analysts cited a combination of factors behind the selloff, including concerns over AI infrastructure financing, China’s semiconductor advancements and intensifying competition in the global memory chip market.Investor sentiment weakened after a Wall Street Journal report suggested Nvidia could provide a financial backstop of around $250 billion for an OpenAI data-centre project. The report pushed Nvidia shares down nearly 5% as investors questioned whether the AI chip leader could be taking on greater financial exposure by supporting its customers’ infrastructure expansion, Reuters said.Meanwhile, reports of China making progress in developing domestic deep ultraviolet (DUV) lithography technology added to market concerns. Such advancements could help China reduce dependence on Western semiconductor equipment suppliers despite restrictions imposed by the United States on access to advanced chip technologies.Investors were also watching the rise of lower-cost Chinese open-source AI models, including Kimi K3, which raised questions about whether future AI workloads would require the same level of computing power previously anticipated. A potential moderation in AI demand could affect future requirements for advanced processors and high-bandwidth memory chips.Adding to concerns, Chinese memory chipmaker CXMT delivered a strong debut in Shanghai, fuelling worries about increasing competition in the global memory semiconductor industry.Reuters also reported that investor unease was heightened by reports that Apple had been lobbying the Trump administration to permit the use of Chinese-made chips in some of its products, further intensifying concerns about China’s growing semiconductor capabilities.The sharp decline in South Korean chip stocks highlights a broader reassessment among investors over AI-related valuations, funding models and the long-term outlook for semiconductor demand after a prolonged rally driven by expectations of rapid AI adoption.Read More News on(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price...moreless(You can now subscribe to our ETMarkets WhatsApp channel)Read More News on(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price...moreless