A global selloff in semiconductor stocks deepened Tuesday, as fresh signs of China’s progress in advanced chipmaking and mounting concerns over the artificial intelligence spending boom sparked another wave of selling across the sector.A Bloomberg gauge of Asian semiconductor shares slumped as much as 7.5 per cent, the most since early March, tracking overnight declines in US peers. A report that a Chinese state-backed company has begun mass producing immersion deep ultraviolet lithography machines fueled fears over rising competition. Meanwhile, Nvidia’s $750 billion in AI infrastructure deals added to worry over AI-related debt levels.The regional benchmark MSCI AC Asia Pacific Index was poised to enter a technical correction, as investors dumped many of this year’s biggest AI winners. South Korea’s Kospi plunged nearly 11 per cent, with memory giants Samsung Electronics Co. and SK Hynix each sliding more than 13 per cent. Japan’s chip-heavy Nikkei 225 and Taiwan’s Taiex both dropped around 4 per cent.The losses underscore how quickly sentiment has turned on one of the market’s most crowded trades. Investors are increasingly questioning whether lofty valuations and an unprecedented wave of AI investment can be sustained. The cost of protecting Nvidia’s debt against default surged by a record on Monday.The jump in Nvidia swaps shows “the credit market noticing something the equity market hasn’t fully priced,” said Dilin Wu, a research strategist at Pepperstone Group Ltd. “The bigger immediate catalyst is the China DUV story” weighing on stocks in Japan and Korea.Mainland China-listed makers of components for chip equipment gained after the DUV report, with Nanjing Wavelength Opto-Electronic Science and Technology Company and Mloptic climbing 20 per cent. The news added to concerns over China’s tech advancement following CXMT’s high-profile market debut Monday in Shanghai.Shares of Japanese chip-equipment makers including Nikon Corp. and Tokyo Electron Ltd. slid more than 10 per cent each. The fact that China is ramping up its production capabilities for advanced chips is a headwind for Japanese manufacturers, said Hiroshi Namioka, chief strategist at T&D Asset Management.The overall declines in Asian chip shares show a lack of confidence at the start of a crucial week of earnings reports from major global technology companies. Plans for expenditures by the likes of Meta Platforms and Amazon.com will hold sway over which way stocks move from here.“The latest selloff in chipmakers shows that doubts over spending, returns and valuations are still deepening rather than fading,” said Hebe Chen, a senior market analyst for Vantage Global Prime. “With several major catalysts approaching, the hesitation to buy the dip suggests investors are waiting for stronger proof before rebuilding exposure.”Memory and storage stocks have held much sway over the momentum of the AI trade this year, as a surge in chip prices drives record profits. With doubts rising over the longer term outlook, big gains are rapidly paring.Kioxia Holdings Corp. slid 18 per cent Tuesday, further paring the rally that briefly made it Japan’s most valuable company last month. SK Hynix has shed around $570 billion in market value since the stock hit a record high in June.Results this week from Samsung and SK Hynix may offer further clues for investors after big swings in their stocks. Even record profit levels don’t seem to be enough to impress the market recently, however.“The bar is just extremely high right now,” said Pepperstone’s Wu. “Beating estimates doesn’t guarantee a pop anymore — we’ve seen that repeatedly over the past few weeks. So part of what we’re seeing today is probably traders trimming ahead of results rather than waiting to find out.” - Bloomberg