China's CXMT IPO soars 466% as AI chip stocks tumble

AI-linked shares plunged across global markets on July 28-30, 2026, after Chinese advances in memory chip production and lithography tools threatened the dominance of Western semiconductor firms. The sell-off highlighted deep investor anxiety about the opaque AI economy and its reliance on a few dominant players.

The slide was triggered by two events on July 27, 2026. Chinese memory chipmaker CXMT debuted on the Shanghai stock market, its value soaring 466% to 3.3 trillion yuan (£365 billion). The same day, reports emerged that Beijing had developed its own deep-ultraviolet lithography tools, breaking the monopoly held by Dutch firm ASML.

South Korea’s Kospi index bore the brunt, tumbling 11.5% on July 28 and another 6% on July 29, dragged down by SK Hynix and Samsung Electronics. By July 30, the Nasdaq had entered correction territory after dropping more than 10% from its recent peak, with Nvidia slumping over 5% and losing its crown as the world’s largest listed company to Apple.

Markets rebounded sharply on July 31 as strong quarterly results from Amazon and Microsoft restored calm, sending the Kospi up nearly 20%. Even so, the index recorded its worst month since October 2008.

Analysts said the sell-off was an overreaction. CXMT makes DRAM memory chips, not the graphics processing units that power AI systems, so it poses no direct threat to GPU leader Nvidia. Forrester analyst Alvin Nguyen noted that a global memory chip shortage is expected to last until 2030, meaning CXMT’s entry could help meet soaring demand rather than disrupt incumbents.

The lithography breakthrough carries greater long-term significance, but experts caution that commercial machines able to rival ASML’s are years away. Civo CEO Mark Boost called it a symbolic victory, not an overnight replacement.

Nvidia’s central role in the AI economy also weighed on sentiment. The Wall Street Journal reported on July 26, 2026, that the chipmaker was considering a $250 billion backstop for an OpenAI datacenter project, following the collapse of a $100 billion deal six months earlier. Morningstar cited that potential commitment as a factor in Nvidia’s share decline.

Alvin Nguyen said Nvidia knows the “gravy train” will eventually end. “Even a diminished Nvidia could still be worth $2 trillion,” he added.