On July 28, 2026, semiconductor stocks across Asia faced substantial declines, driven primarily by growing concerns over advancements in China's AI chip industry.
Significant Stock Drops
The most notable impact was observed on South Korean giants, Samsung Electronics and SK Hynix. Samsung's shares plummeted by 13.4%, marking its largest one-day drop in nearly twenty years. Similarly, SK Hynix's stock fell by 14.7%.
Market Reactions
This downturn contributed to a significant drop in the Korea Composite Stock Price Index (KOSPI), which fell by 10.8%. This marked the index's most considerable decline since the turmoil following the US-Iran conflict in March 2026. Other markets were also affected, with Japanese memory chip producer Kioxia Holdings experiencing an 18.3% drop in shares, while Taiwan's MediaTek saw a nearly 10% decline.
Factors Behind the Decline
Analysts attribute the sell-off to a combination of factors, particularly reports regarding advancements in semiconductor technology from China. Han Ji-young, an analyst from Kiwoom Securities, highlighted that Chinese companies are reportedly developing their own deep ultraviolet (DUV) lithography machines. This technology is critical in semiconductor manufacturing, allowing for the intricate patterns needed on silicon wafers.
China's Technological Progress
In July of the previous year, Semiconductor Manufacturing International Corporation (SMIC), China's leading chip manufacturer, successfully produced chips using 5-nanometer fabrication technology. They achieved this by maximizing the capabilities of existing DUV equipment, creating a manufacturing process that is claimed to rival extreme ultraviolet (EUV) technology.
As chip fabrication numbers decrease (from 7nm to 5nm to 3nm), the performance of the chips generally improves, allowing for more advanced features. Furthermore, there are reports that SMIC is experimenting with pushing DUV technology even further to produce 3nm chips utilizing a method known as Self-Aligned Octuple Patterning (SAOP). Should this technology be commercialized successfully, Chinese memory chip producers could significantly boost their production capacity, intensifying global market competition.
Source: https://tekno.kompas.com/read/2026/07/29/10230087/kemajuan-chip-ai-china-bikin-saham-samsung-dan-sk-hynix-kompak-rontok
