China's independent step in developing domestic Deep Ultraviolet (DUV) lithography chipmaking machines has triggered extraordinary panic in global financial markets. The success of this innovation is seen as breaking Western technological dominance and triggering a mass sell-off targeting the semiconductor sector, particularly on the US stock exchange.
In Monday's trading (27/7), Wall Street's memory stock sector took a heavy blow, losing up to 541 billion US dollars in market capitalization in just a matter of hours. Chip giant Nvidia recorded a 4.37 percent decline, wiping out 300 billion US dollars of its market value. This weakness was also followed by a sharp drop in SK Hynix shares by 9.48 percent, SanDisk plunged 10.42 percent, Western Digital fell 5.93 percent, Seagate corrected 5.59 percent, and Micron weakened 4.69 percent.
Investor anxiety is rooted in the potential for an oversupply of global chips from factories in China without relying on Western supply chains and licenses. This is feared to trigger a price war and damage the global profitability of memory chips, which has been dominated by giant US issuers.
The domino effect of this tech sector shock quickly spread to the cryptocurrency market, highlighting the close liquidity correlation between mega-cap tech stocks and digital assets. As a result, the price of Bitcoin plunged sharply to touch the 63,500 US dollar level, while Ethereum was pressured down to 1,880 US dollars as market players moved their capital into safer assets.
