Key Points

• Broadcom CEO compares speculative AI investments to gambling
• Samsung drops 7.4%, SK Hynix drops 10%
• Progress in China's storage chips has increased pressure on semiconductor valuations

Broadcom CEO Hock Tan ( Hock Tan ) warned that speculative investments in artificial intelligence are increasingly resembling casino gambling, which has exacerbated concerns about the global AI craze and led to another round of heavy selling in semiconductor stocks.

Samsung Electronics' stock price fell by about 7.4% on Tuesday (October 13), while its competitor SK Hynix saw a decline of 10%. Previously, the Philadelphia Semiconductor Index fell by 2.7% on Monday, continuing the broader correction in AI related tech stocks.

However, this round of selling off reflects more than just Tan's remarks. As competition among Chinese storage chip manufacturers intensifies, doubts about the profitability of this industry are also on the rise.

Broadcom CEO warns AI investors that they are taking on risks similar to those of casinos

Tan stated at a technology forum in Singapore on October 12 that investors who put capital into artificial intelligence often do not fully understand the relevant companies or technologies.

According to Reuters, Tan compared some investment fervor to gambling in casinos and warned that if the AI company fails to deliver the expected returns, unrealistic expectations could expose investors to risk.

This Broadcom executive also pointed out that financing is becoming an increasingly significant challenge for the industry. Although semiconductor manufacturers are gradually alleviating the shortage of wafers and memory chips, raising sufficient investment funds for the expansion of AI may become an even greater constraint.

His remarks are not a denial of artificial intelligence itself. Tan acknowledges that OpenAI and Anthropic have demonstrated considerable revenue-generating potential through their latest AI models.

Nevertheless, doubts surrounding the revenue from AI and infrastructure expenditures are increasingly affecting semiconductor valuations, especially at a time when companies are investing billions of dollars in computing power capacity.

Intensifying competition in China's chip industry sees Samsung's stock drop by 7%

The latest round of declines has been particularly severe in South Korea, as semiconductor manufacturers hold a dominant position in that country's stock market.

Samsung fell by 7.4%, SK Hynix fell by about 10%, dragging down South Korea's KOSPI index by 5.5%. Semiconductor stocks in Japan and Europe also weakened, and related concerns spread to the global tech market.

Another catalytic factor is the progress announced by China's ChangXin Memory Technology ( ChangXin Memory Technologies ). The company is developing a higher-density DRAM architecture, which may help to improve storage manufacturing efficiency.

This development may intensify the competition faced by established storage manufacturers such as Samsung, SK, Hynix, and Micron, however, large-scale commercial production has not yet been verified.

These concerns continue the market sentiment that followed Micron's previous sell-off. At that time, investors began to re-evaluate whether Chinese manufacturers would ultimately challenge the pricing power of AI's leading storage suppliers.