The AI trade, which has been the gravity center of global risk appetite for the better part of two years, just hit a wall. Chip stocks across Asia and the US tumbled in a cascading selloff that sent South Korea’s KOSPI index down nearly 10%, triggered a circuit breaker, and dragged Japan’s Nikkei down 4.4% on July 28.
What actually happened
The dominoes started falling on July 27 when Nvidia dropped 5%. The catalyst was a Wall Street Journal report detailing discussions around financing guarantees that could reach up to $250 billion, alongside a $350 billion deal for chip purchases tied to an OpenAI data center.
Then ASML, the Dutch company that makes the machines that make the chips, fell 8.5%. The reason: reports that China has begun advancing its domestic production of immersion DUV lithography machines, getting closer to building the tools needed to manufacture advanced chips without relying on Western suppliers.
Meanwhile, Chinese memory chipmaker CXMT Corp debuted on the Shanghai stock exchange and immediately topped market valuations.
