By Intel and AMD shares fell on Tuesday as a broader selloff in semiconductor stocks gathered pace, driven by intensifying competition from China and growing concerns that financing constraints could slow the expansion of artificial intelligence infrastructure.
Intel was down about 1.4% by 11 am, while AMD shares fell just over 1%.
The S&P 500 was largely flat, trading 0.1% lower, while the Nasdaq Composite declined 0.3%.
The Philadelphia Semiconductor Index, however, fell more than 2%, reflecting the pressure on chipmakers.
Semiconductor stocks have come under pressure since Monday as investors assessed the implications of China’s progress in memory chip manufacturing and growing uncertainty over the sustainability of AI-related spending.
CXMT’s advances fuel semiconductor selloff
China’s ChangXin Memory Technologies (CXMT) announced “key progress” in developing a new memory-cell architecture designed to increase storage density, a technology also being pursued by Samsung Electronics and SK Hynix.
CXMT President Cao Kanyu said at an industry event in Shanghai over the weekend that the company planned to introduce a new server-memory product based on the technology by the end of 2026, according to a company statement.
The development has raised concerns about the competitive threat facing the world’s three leading memory chipmakers — Micron, Samsung and SK Hynix.
South Korea’s benchmark stock market, which has significant exposure to the semiconductor industry, tumbled on Tuesday, led by steep losses in Samsung Electronics and SK Hynix, two of the world’s largest memory chip manufacturers.
Micron and SK Hynix had also declined on Monday following the news and continued to fall on Tuesday.
Storage companies, including SanDisk, Western Digital and Seagate Technology, also came under pressure on Tuesday.
European semiconductor stocks, including ASML, also declined on Tuesday.
CXMT has been steadily expanding its memory production, although analysts have cautioned that the company has yet to demonstrate its ability to manufacture at scale.
A Counterpoint Research report published last month showed that CXMT captured 10% of the global dynamic random-access memory (DRAM) market in the second quarter of 2026, compared with 4% in the same period a year earlier and 8% in the first quarter.
HBM remains a key advantage for established chipmakers
Despite CXMT’s progress, analysts expect established memory chipmakers to retain an advantage in high-bandwidth memory (HBM), which is critical for advanced AI accelerators.
However, CXMT’s ambitions in the segment are attracting attention.
The Information reported in August that the company had begun producing advanced HBM in small quantities.
CXMT plans to expand production in 2027, while Alibaba’s T-Head semiconductor unit and Chinese AI chip designer Cambricon are already testing its HBM products with their processors.
The prospect of additional Chinese supply has also raised concerns about the cyclical nature of the memory industry, where periods of strong demand and investment can be followed by oversupply and sharp price declines.
Investor Cathie Wood warned on Tuesday that China’s expanding memory chip capacity could intensify the boom-and-bust cycles that have historically affected the sector, according to Bloomberg.
Speaking to investors in Hong Kong, Wood said ARK avoids conventional memory chip companies because of the risk of sharp price declines when supply exceeds demand.
“The trend is up, but the cycles are vicious,” Wood said, according to Bloomberg.
If “you get a few more incremental competitors, especially out of China, the volatility will increase.”
Wood identified state-backed Chinese manufacturers such as CXMT as a potential source of additional supply pressure, which could make pricing more volatile across the sector.
Rising bond yields put AI spending under scrutiny
Beyond the threat from China, semiconductor stocks are facing heightened pressure from growing concerns over the cost and sustainability of the AI infrastructure buildout.
Rising bond yields have increased the cost of financing data centres and other capital-intensive projects, while investors are becoming more selective about companies seeking funds to expand their AI capabilities.
Earlier this month, Australian data centre operator Firmus, which is backed by Nvidia, shelved its planned $5 billion initial public offering and opted instead for a private fundraising round.
The offering would have been the second-largest new share sale in Australia’s history but attracted lukewarm demand, according to reports.
The decision added to concerns about AI valuations and the sustainability of the enormous investments required to build computing infrastructure.
On Tuesday, BlackRock Investment Institute, the research arm of the world’s largest asset manager, downgraded its outlook on US stocks to neutral, citing “potential volatility around the AI buildout”, while turning bullish on short-term Treasuries.
However, BlackRock continues to favour AI-related companies and technology stocks, maintaining that its fundamental conviction in artificial intelligence remains intact.
Demand for the technology and the limited availability of critical infrastructure continue to support its investment outlook.
The firm said it was managing near-term risks rather than abandoning its core convictions.
It also noted that higher interest rates were increasingly distinguishing companies capable of generating earnings and returns above their cost of capital.
“The most important development has been not just bond yields going up, but the volatility for bonds … and that’s starting to work its way out through asset pricing across the board,” said Damien Boey, portfolio strategist at Wilson Asset Management in Sydney, in a Reuters report.
“It’s a very uncomfortable situation on many fronts … maybe AI capex just comes off the boil a little bit, and maybe a few players are casualties in that.”
Semiconductor executives warn of capital constraints
Warnings from senior semiconductor executives about financing added to investor concerns over the outlook for AI spending.
Broadcom chief executive Hock Tan said access to capital could become one of the biggest constraints on the industry’s growth, even as demand for computing infrastructure continues to exceed supply.
“[What] I think might be the biggest constraint is capital,” Tan said at the DBS Asia Future Forward Conference in Singapore on Monday.
Intel chief executive Lip-Bu Tan echoed those concerns, pointing to rising financing costs and questions over whether companies investing heavily in AI will eventually generate sufficient returns.
“If there’s any challenge in the front, it’s capital and the cost of capital, and then the other part is in the longer run, people want to see the ROI,” he said.
The comments underscore the challenges facing semiconductor companies as they navigate both intensifying competition and the enormous investment requirements of the AI boom.
While demand for advanced computing remains strong, investors are increasingly weighing the risks of higher financing costs, potential overcapacity, and uncertainty over how quickly spending on AI infrastructure will translate into sustainable returns.
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