Asia tech stocks sank on Tuesday amid concerns that China has started mass production of deep ultraviolet (DUV) lithography machines, which are used to make computer chips. According to the report, a state-backed company based in Shanghai has begun manufacturing domestically developed immersion DUV lithography machines.
Two sources revealed that the first machines are due to be delivered this year to three of China’s biggest chipmakers – SMIC, Hua Hong Semiconductor, and ChangXin Memory Technologies, the memory chipmaker which listed on the Shanghai Star Market on Monday.
The company, Yuliangsheng, is reportedly aiming to build five machines this year and about 20 in 2027. This development is timely, as all three of the chipmakers due to receive the locally-made lithography machines are among those that would be affected by a bill now going through the US Congress, which aims to cut them off from sales and servicing by ASML, the Dutch tech conglomerate that has long dominated the lithography sector.
Related: XRP gains momentum as SEC lawsuit hopes rise
Officials in Beijing have spent tens of billions of dollars over the past decade in a desperate bid to develop such technology to counter US moves aimed at denying China advanced chips and high-end lithography machines. Experts say these “homegrown” machines are still expected to lag behind ASML and other foreign rivals in performance and reliability, and require further testing before achieving full-scale maturity.
China is still seen as being years behind the West, but the development of DUV lithography machines is regarded as a significant step forward for the production of basic semiconductors.
South Korea’s Kospi stocks index plunged almost 11% after the report, but analysts said news of China’s development simply compounded worries about the longevity of the AI boom. Susannah Streeter, chief investment strategist at Wealth Club, said “The AI powered rollercoaster has taken another lurch downwards, with chip stocks falling sharply, as investors reassess rising competition and future demand.”
Investors are also concerned that “circular funding” by chipmakers such as Nvidia has perpetuated the long-running AI boom. The losses extended a recent sell-off in tech stocks following an eye-watering rally over the past two years that sent several indexes and companies to record highs.
Related: Mexican Intelligence to Secure World Cup
Seoul-listed SK Hynix sank 14.7% and Samsung more than 13%. Both firms have shed nearly 50% of their market value since hitting all-time highs last month. Tokyo’s Nikkei tanked 4% as Kioxia, Advantest, and Tokyo Electron shares all tumbled.
Taipei also fell more than 4% as market heavyweight TSMC took a hit. Investors are now awaiting earnings this week from SK Hynix, Samsung, and Kioxia, as well as US titans Microsoft, Meta, Apple, and Amazon.
Brent North Sea Crude: DOWN 2.2% at $86.40 per barrel. West Texas Intermediate: DOWN 2.0% at $81.00 per barrel. Seoul – Kospi: DOWN 10.8% at 6,023.66 (close). Tokyo – Nikkei 225: DOWN 4.0% at 62,364.92 (close). Hong Kong – Hang Seng Index: UP 0.4% at 25,310.85 (close).
Leave a Reply