Kioxia plunges 60% as Asian chip rout deepens on China fears

Kioxia Holdings has lost more than 60% of its value from the year-to-date high, hitting the lowest level since May 15 ahead of its July 31 earnings report.

Asian semiconductor stocks suffered their worst session in months on Tuesday, with Japan's Kioxia Holdings leading the decline as investors fled the sector on mounting concerns over AI infrastructure financing risks and intensifying competition from Chinese chipmakers. The Japanese flash memory maker slumped nearly 18% in morning trade, extending a rout that has erased billions in market value.

"We seem to be at the despair part of the selloff, where tech investors are rushing for the exit because the Nasdaq says so," Matt Simpson, a senior analyst at StoneX, said. "But right now the KOSPI is setting the tone for sentiment in Asia, and it looks ugly."

The selloff swept across the region. South Korea's Samsung Electronics plunged as much as 13.4% and SK Hynix dropped 14%, dragging the benchmark KOSPI down 9.4%. SK Hynix's US-listed shares closed at $143.02, falling below their $149 initial public offering price for the first time since debuting this month. Taiwan's MediaTek fell more than 9%. Together, the declines erased hundreds of billions of dollars in market capitalization from the region's semiconductor sector.

The rout reflects a convergence of three threats to the AI-driven semiconductor thesis. First, a Wall Street Journal report that Nvidia could provide a roughly $250 billion financial backstop for an OpenAI data center project sent Nvidia shares down nearly 5%, raising questions about whether the AI chip leader is effectively financing its own customers. Second, reports that Chinese companies are developing domestic deep ultraviolet (DUV) lithography equipment reignited fears that Chinese memory makers could accelerate capacity expansion. Third, the growing popularity of low-cost Chinese open-source AI models such as Kimi K3 has raised doubts about whether future AI workloads will require the same intensity of advanced chips and high-bandwidth memory.

China's Memory Challenge Intensifies

Chinese memory-chip maker CXMT's strong stock-market debut on the Shanghai exchange on Monday added a fresh layer of concern. The listing, one of Asia's largest IPOs this year, reinforced fears that CXMT could emerge as a more formidable memory supplier, increasing the risk of oversupply and weaker pricing, said Ryu Young-ho, a senior analyst at NH Investment & Securities.

"CXMT is going to be one of the big index weights. As that's going on, people have to dump more of their existing stocks," said Hao Hong, managing partner and chief investment officer at Lotus Asset Management in Hong Kong.

The CXMT listing followed reports that Apple had been lobbying the Trump administration to allow the use of Chinese-made chips in some products, further unsettling investors already concerned about China's growing technological capabilities.

Kioxia's Earnings Test

Kioxia is scheduled to report second-quarter earnings on July 31. The market expects profit to double from the previous quarter, according to TechNews, supported by higher NAND flash memory prices. However, the stock's 60% decline from its year-to-date high suggests investors are pricing in a sharp deterioration in the NAND market.

TrendForce expects server demand for NAND to remain strong through 2027, but continued process migrations by suppliers and weak consumer electronics demand are expected to gradually restore market balance, with supply tightness easing in the second half of 2027. For Kioxia, the earnings report will be a critical test of whether the company's fundamentals can justify any recovery from current depressed levels.

Han Ji-young, an analyst at Kiwoom Securities, said investors are becoming increasingly cautious ahead of the earnings season. "Despite stronger-than-expected earnings from Samsung Electronics earlier this month and Alphabet last week, semiconductor shares experienced sharp declines after the results," he said.

Kioxia shares, along with the broader semiconductor sector, face a make-or-break week. A strong earnings beat could spark a relief rally, but any sign of weakening demand or margin pressure could accelerate the selloff. For investors, the question is whether the current rout represents a buying opportunity or the beginning of a deeper correction in AI-driven semiconductor valuations.

This article is for informational purposes only and does not constitute investment advice.