A cluster of semiconductor and equipment stocks fell 9–10% after Samsung's record earnings triggered profit-taking and reports surfaced that DeepSeek is developing its own AI inference chip. The moves reflect both a pullback from gains already priced into memory stocks and renewed concern that custom silicon—being built by OpenAI, Anthropic, and now DeepSeek—may erode Nvidia's dominance over time.
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Semiconductor and related stocks fell sharply in morning trading after Samsung Electronics reported record quarterly profit (operating profit of 89.4tr won / $58.4B, up 1,810% year-over-year) and Reuters reported that China's DeepSeek is developing its own AI inference chip. Semtech fell 9.1%, Power Integrations fell 9.2%, Amkor fell 9%, Entegris fell 9.9%, and Kulicke and Soffa fell 9.7%.
Why it matters
Memory-focused stocks had rallied heavily into Samsung's earnings report, so a strong result triggered a "sell-the-news" reaction — investors locked in gains believing the good news was already priced in. Separately, DeepSeek's chip project revives structural concerns that custom silicon erodes Nvidia's competitive advantage, following similar moves by OpenAI (which built an inference chip with Broadcom) and Anthropic (in early talks with Samsung on a 2nm accelerator).
What to watch
Morgan Stanley warned clients earlier in the week that the AI rally was "nearing its end" and expected "more capex discipline." SK Hynix's approximately $28bn Nasdaq debut could pull institutional capital from Micron and related peers. DeepSeek's chip project remains early-stage and constrained by US export controls on advanced foundries and high-bandwidth memory.
Samsung's preliminary Q2 results delivered a textbook earnings surprise: operating profit surged 1,810% year-over-year to 89.4tr won ($58.4B), with revenue up 129% to 171tr won, beating consensus forecasts. However, because memory-focused semiconductor stocks had already rallied substantially into the earnings release, the strong result prompted a reversal. Investors who had positioned for upside locked in gains, interpreting the confirmation of the AI memory supercycle not as new positive news but as confirmation that all available good news had already been priced in.
Compounding the selloff was a second structural worry: Reuters reported that DeepSeek is developing its own AI inference chip. While the project is early-stage and faces real constraints from US export controls on advanced foundries and high-bandwidth memory, it fits into a troubling (for Nvidia) pattern. OpenAI has already built a Broadcom-supplied inference chip (codenamed "Jalapeño"), and Anthropic is in early talks with Samsung about a 2nm accelerator. The cumulative effect of multiple AI labs pursuing custom silicon raises the possibility that Nvidia's historic pricing power and market dominance in AI chips may face structural erosion over time.
A third headwind was sentiment timing. Morgan Stanley had warned clients earlier in the week that the AI rally was "nearing its end" and expected "more capex discipline," suggesting that euphoria around AI spending may be moderating. Against that backdrop, SK Hynix's planned approximately $28bn Nasdaq debut looms as a potential drain on institutional capital from peers like Micron. Combined with reported heavy insider selling and Michael Burry's disclosed short position in Micron, the confluence of negative signals pushed investors toward the exits.
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