Shares of Micron, Nvidia, and AMD declined in premarket trading Tuesday, extending Monday's losses as investors weighed intensifying competition from Chinese chipmakers and growing unease over how the next wave of AI infrastructure will be funded.
At 5:32 a.m. ET, Micron was down 4.4%, Nvidia had fallen 1.1%, and AMD was roughly 3% lower. The weakness followed a broader selloff on Monday, when Nvidia dropped 5%, AMD slid 5.2%, and Micron lost 2.3%. The selling was far more severe in Asia, where South Korea's KOSPI closed 10.84% lower, and SK Hynix and Samsung Electronics each plunged more than 14%.
China's chip progress rattles the market
The immediate catalyst was a report that a Chinese state-backed company had begun producing domestic immersion deep-ultraviolet lithography equipment. DUV machines are critical for printing circuit patterns on wafers, and the development suggests Chinese manufacturers could reduce their reliance on Western suppliers. While the equipment does not match ASML's most advanced tools, it indicates that export controls may delay rather than permanently block Chinese technological progress.
Morningstar equity analyst Jing Jie Yu described the selloff as "largely a knee-jerk reaction and overdone", noting that incumbents face no immediate meaningful threat. However, Micron is particularly exposed because ChangXin Memory Technologies (CXMT) competes directly in the DRAM market. CXMT surged 466% during its Shanghai debut after raising $8.6 billion, highlighting the capital available for China's memory ambitions. Although CXMT remains behind Micron in advanced high-bandwidth memory, the longer-term concern is that new conventional DRAM capacity could replace imports in China, pressure global prices, and reduce the valuation premium attached to established producers. For more on this, see CXMT's IPO and its risks to Micron's DRAM business.
Nvidia's financing role raises AI demand questions
The selloff also reflects discomfort over how the next wave of AI infrastructure will be financed. Nvidia fell 5% on Monday after The Wall Street Journal reported that it was discussing a roughly $250 billion financing guarantee for an OpenAI data-center project in Ohio. The proposed support could lower the project's borrowing costs, but it revived concerns about circular funding—whether chip suppliers will increasingly need to support customers financially to sustain demand for their own products. Swissquote senior analyst Ipek Ozkardeskaya noted that Nvidia's five-year credit-default swap rose alongside the share decline. This dynamic is further explored in Nvidia's OpenAI guarantee and its implications for AI infrastructure.
Hyperscaler earnings will test AMD and Micron
AMD is being sold mainly as a read-through from the wider spending cycle. Its Instinct accelerators, EPYC processors, and Helios systems require cloud providers and model developers to keep expanding infrastructure. Micron needs the same customers to continue buying HBM and data-center DRAM. UBS Global Wealth Management chief investment officer Mark Haefele said "uncertainty over the durability of capex and revenue growth" was hurting chip stocks.
Microsoft and Meta report on Wednesday, followed by Apple and Amazon on Thursday. Investors will examine cash flow, AI revenue, and capital-expenditure plans for evidence that spending remains profitable and financeable. The upcoming earnings could provide clarity on whether the current selloff is a temporary overreaction or the start of a deeper correction. For context on broader market moves, see how chip stocks slid amid China competition fears.
This article is for informational purposes only and does not constitute financial advice.
