U.S. Semiconductor Stocks Plunge Amid AI Development Concerns

 
The U.S. stock market declined due to concerns over the pace of artificial intelligence (AI) technology development and rising government bond rates. Notably, shares of AI and semiconductor companies, including Nvidia and Micron, fell sharply, which is expected to weigh on the domestic market as well. Following a significant correction in the domestic market the previous day, the potential for further declines in the KOSPI has been raised.
 
As of 8:21 a.m. on September 15, Samsung Electronics was trading at 248,000 won, down 1,000 won (-0.40%) from the previous trading day. SK Hynix also saw a decrease of 9,000 won (-0.53%), bringing its price to 1,688,000 won. While U.S. semiconductor stocks plummeted, the declines in domestic semiconductor stocks appeared relatively limited.
 
SK Square rose 0.20% to 1,002,000 won, and LG Energy Solution increased by 0.43% to 353,000 won. In contrast, Samsung Electro-Mechanics (-0.75%), Hyundai Motor (-1.08%), Samsung Biologics (-0.56%), KB Financial (-1.15%), Samsung Life (-1.17%), and Hanwha Aerospace (-1.84%) showed weakness.
 
On September 14 (local time), the Dow Jones Industrial Average fell by 0.28%. The S&P 500 and Nasdaq Composite also dropped by 0.52% and 0.64%, respectively.
 
The decline in AI and semiconductor stocks was particularly pronounced. Nvidia fell by 3.36%, while Broadcom (-4.77%), Intel (-5.59%), AMD (-4.40%), and Micron (-5.25%) all experienced significant losses. SK Hynix's American Depositary Receipts (ADRs) plummeted by 7.60%, and the Philadelphia Semiconductor Index dropped by 5.86%.
 
Concerns about slowing the pace of technology development in the AI sector have dampened investor sentiment. Dario Amodei, CEO of Anthropic, warned of the potential misuse of AI and advocated for slowing model development to establish safeguards. Elon Musk, CEO of SpaceX, echoed this sentiment.
 
Interest rate pressures have also increased. The yield on the U.S. 10-year Treasury note surpassed 5% during trading, adding to valuation concerns in the stock market. International oil prices have risen as fears of supply disruptions in the Middle East persist, with West Texas Intermediate (WTI) crude reaching $101.80 per barrel.
 
Han Ji-young, a researcher at Kiwoom Securities, stated, "The U.S. stock market showed weakness due to the strengthened outlook for a September FOMC rate hike and the 10-year Treasury yield surpassing 5%, along with concerns over the pace of AI development. However, the fact that much of the early losses were recovered indicates that worries about continuous rate hikes by the Federal Reserve are limited."
 
In the domestic market, the potential for further declines in semiconductor stocks is seen as a key variable. However, in the pre-market, the declines for Samsung Electronics and SK Hynix were limited to 0.40% and 0.53%, respectively, suggesting that the shock from the drop in U.S. semiconductor stocks may not fully translate to the domestic market. The easing of price pressures from the previous day's drop, combined with a reduction in losses in the U.S. market, raises the possibility that the KOSPI could recover some of its early losses.
 
One analyst noted, "Despite the pressures from the U.S. 10-year Treasury yield surpassing 5.0% and the drop in U.S. semiconductor stocks, the perception that these factors were already priced into the domestic market and the reduction in losses in the U.S. market suggest that the KOSPI may recover some of the previous day's declines."
 
He added, "This does not mean halting AI development, and there are no signs yet of reduced AI investment or a slowdown in memory demand. Even if volatility increases this week due to the AI pace adjustment issue, the benefits of panic selling are limited."
 
He also suggested that maintaining existing positions or diversifying into sectors with relatively lower beta and defensive characteristics, such as banks and insurance holding companies, could be alternatives.