If you’re experiencing déjà vu watching AI chip stocks crater because of a Chinese AI model, you’re not imagining things. It happened in January 2025 with DeepSeek. And now it’s happening again, only bigger.
Moonshot AI’s release of the Kimi K3 model on July 17 sent the PHLX Semiconductor Index (SOXX) tumbling 10% in a single week, its steepest weekly decline since April 2025. The index has now fallen more than 20% from its recent peak, officially entering bear-market territory.
What happened and why it matters
Kimi K3 is not your average model update. With 2.8 trillion parameters, it’s a behemoth, and Moonshot AI is making the entire thing open-source. That combination, massive scale plus free availability, is the part that has Wall Street reaching for the antacids.
The damage was widespread across US markets. Nvidia, Broadcom, AMD, Arm, Intel, and Micron all took hits during the selloff week.
