US chip stocks extend slide as China memory report, AI spending jitters hit sector

US Chip Stocks Slide as China Memory Competition and AI Spending Concerns Weigh

US Chipmakers Face Pressure Amid Rising Competition and AI Spending Fears

Oct 13 (Reuters) - Shares of US chipmakers dropped on Tuesday, with memory-related companies leading losses as reports of a technology advance by China's CXMT stoked competition fears and added to jitters over AI spending in a sector that has rallied sharply this year.

The broader Philadelphia chips index fell 1.5%, down for the fifth straight session and at its lowest in about four weeks.

Key Market Movements

Here are the details:

Major Memory and Data Storage Companies See Declines

• Memory chipmaker Micron slipped 4.5% to its lowest since September 16, its fourth straight daily decline

• Data storage companies Sandisk slid 4.3%, Seagate Technology dropped 5.9% and Western Digital declined 5.8%

Chinese and South Korean Developments Intensify Competition

• Media reports this week said Chinese memory chip giant CXMT has made "key progress" on a new cell architecture to boost memory density

• Samsung Electronics and SK Hynix are also working on a similar innovation

• In South Korea, shares of memory chip giant Samsung tumbled over 7% and SK Hynix slid more than 10%

Market Sentiment and Analyst Commentary

• "When you back off and realize there might be competition coming, all the sheep run to the door at the same time," said Robert Pavlik, senior portfolio manager at Dakota Wealth, describing the move as a rush to take profits

AI Sector Investment Concerns

• Broadcom CEO Hock Tan on Monday compared AI sector investments to "casino gambling"

• Broadcom shares fell 0.3% in sector-wide weakness

• Chip giant Nvidia slipped 0.4%, Intel fell 1.1%, AMD dropped 1.2% and Marvell Technology declined 2.2%

Philadelphia Chips Index Performance

• Despite recent losses, the Philadelphia chips index is up over 70% so far this year, having rallied on hopes of robust AI-related demand

(Reporting by Shashwat Chauhan and Purvi Agarwal in Bengaluru; Editing by Shinjini Ganguli)