Stock market turmoil sheds stark light on the opaque AI economy
Summary
Last week, the stock market experienced big swings due to news about China's advances in chip technology, including the rise of the Chinese chipmaker CXMT and their claim to produce key lithography machines. While some Western chipmaker stocks fell sharply, experts say the fears may be exaggerated because it will take years for China to catch up in making the most advanced AI chips.Key Facts
- Chinese chipmaker CXMT's stock rose over 466% after its debut on the Shanghai stock exchange.
- China claims to have developed deep-ultraviolet lithography tools, previously made only by the Dutch company ASML.
- These lithography tools are essential for making very precise and advanced computer chips.
- Western AI-related chip stocks, including South Korea’s SK Hynix and Samsung Electronics, dropped significantly last week.
- The Nasdaq tech index in the U.S. fell more than 10% during the week before recovering somewhat.
- CXMT makes memory chips often used alongside AI chips but does not compete directly with Nvidia’s GPUs, the main AI chips.
- Industry experts believe the global shortage of memory chips will continue until about 2030.
- It will take several years for China to produce competitive AI chips and to replace ASML's machines commercially.
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