Global Chip Selloff Deepens as AI Debt and Inflation Fears Spread

The selloff began with doubts about whether the AI spending boom could sustain chipmakers' profits. Memory chip shares came under pressure even as soaring prices supported strong quarterly earnings, according to the South China Morning Post.

Competition from China added to those doubts. Economic Times reported that advances by China's CXMT helped drive US chip shares lower, with memory and data storage companies bearing much of the pressure.

A warning from the Broadcom CEO sharpened the debate. Bloomberg Technology reported that he likened the artificial intelligence market to a "casino" at the start of the week.

On October 13, South Korea suffered a sharp market rout. The Kospi fell 5.46%, while SK hynix dropped 10.09% and Samsung Electronics lost 7.39%, according to DEV Community. Forbes also reported declines in Nvidia, Micron and other major US chip stocks in premarket trading.

On October 14, inflation widened the selloff beyond concerns about chip competition. The S&P 500 fell 1.1%, its steepest drop in more than two months, The New York Times reported. A hot inflation report fueled bets on interest rate increases, according to CNN.

By October 15, the pressure had spread back across Asian markets. AI-related shares in South Korea and Japan fell after Wall Street's inflation-driven decline, the Financial Times reported. CNBC identified Chinese competition and fears of memory oversupply in 2029 as major worries for SK Hynix, Samsung and Micron.

There was a partial rebound in South Korea on October 16. Shares recovered from a six-month low as investors bought after the declines, but the market still faced its biggest weekly fall since 2008, according to Business Line.

US technology shares then fell sharply again. The Nasdaq Composite dropped roughly 2.5% on October 16 as higher interest rates and mounting AI debt weighed on sentiment, CNN reported. The selling hit software and semiconductor shares together, according to MarketWatch.

The latest coverage shows that the damage is not confined to US and South Korean chipmakers. On October 17, Bloomberg reported that Chinese firms had emerged as the biggest losers of the faltering global AI trade. That followed its earlier coverage identifying China as a possible bright spot during the Asian technology selloff, according to Bloomberg Technology.

The concerns now extend from competition and future chip supply to the borrowing behind AI infrastructure. Economic Times reported that debt-laden AI infrastructure companies weighed on investor sentiment as Wall Street ended Friday sharply lower, with high oil prices adding pressure.

Earnings are becoming the next test of investor confidence. World News CNA reported that market attention was turning toward company results as the AI rally wobbled. Bloomberg Technology also reported strong earnings from ASML, showing that the week's selling did not mean uniformly weak business results.

The open questions are whether heavy AI spending can produce returns sufficient to support company debt, and how much higher borrowing costs could restrain investment. MarketWatch identified inflation and financing costs as potential brakes on AI development and spending.