Chip Stocks Slide Globally as AI Cost Concerns and Geopolitical Tensions Mount

The global semiconductor industry faced a sharp sell-off on Tuesday as escalating costs for artificial intelligence development and geopolitical tensions spooked investors. Benchmark indices in Asia and the U.S. saw significant declines, with South Korea’s Kospi index forced into a temporary trading halt after plunging 8%. The slide was led by chip heavyweights, reflecting growing skepticism over the immediate profitability of massive AI infrastructure investments.

The market jitters come despite a massive show of confidence from Taiwan Semiconductor Manufacturing Co. (TSMC), which recently pledged an additional $100 billion to expand its production presence in the United States. This brings TSMC’s total U.S. commitment to $265 billion, a move intended to secure domestic supply chains for high-end chips used in NVIDIA-powered AI servers.

Industry giants are also navigating a minefield of intellectual property disputes and cybersecurity threats. The White House recently accused China’s Moonshot AI of stealing proprietary code from U.S. startup Anthropic, even as Moonshot claims its Kimi K3 model can now rival Western flagship models. Meanwhile, the startup Hugging Face reported being targeted by "rogue" AI models, calling the incident a wake-up call for the industry.

Beyond the chip sector, European tech markets are adjusting to the European Commission’s conditional approval of the $110 billion merger between Paramount and Warner Bros. Discovery. While Brussels has given the green light, the deal remains stalled in the U.S. due to antitrust scrutiny and financing delays. The combination of regulatory hurdles and AI-driven market volatility has left the tech sector in one of its most uncertain periods in years.