Global chip sell-off deepens as South Korean market plunges

A global sell-off in memory-chip stocks deepened overnight as South Korea's benchmark KOSPI ( ^KS11 ) tanked 7%.

Micron ( MU ) and SK Hynix ( SKHY ) were poised to open lower on Wednesday as SK Hynix ( 000660.KS ) and Samsung Electronics ( 005930.KS ) fell 10% and 8%, respectively, after tanking earlier this week over concerns about intensifying competition from China. The two memory giants account for more than half of the South Korean stock market's total capitalization.

The sell-off in South Korea followed a decline in the chip sector on Wall Street on Wednesday as worries about further rate hikes collided with fears of AI-driven debt financing.

Chip giant Nvidia ( NVDA ), Broadcom ( AVGO ), AMD ( AMD ), and Intel ( INTC ) all led the chip stocks lower during the session.

On Wednesday, worries about borrowing costs also hit the AI trade.

CoreWeave ( CRWV ) stock fell more than 15% after a chart of the neocloud providers' bond yields circulated on social media.

The stock's sharp sell-off highlighted concerns about the company's debt-heavy balance sheet and whether it can scale fast enough to manage its growing interest expense.

Any slowdown in AI spending could spell trouble for chip makers, which have been the main beneficiaries of infrastructure spending as hyperscalers race to build out data centers.

On Thursday, investors will get another glimpse of the health of the AI buildout when TSMC ( TSM ) reports quarterly results. Investors expect quarterly profits to rise 60%.

Investors will pay close attention to the foundry's capacity, given ASML's ( ASML ) results on Wednesday. The maker of advanced chip-making machines warned it may not be able to fully meet demand in 2027 and 2008.

Ines Ferre is a senior business reporter for Yahoo Finance.