What Caused Samsung, Nvidia, And AMD Shares To Drop Sharply

Global semiconductor stocks fell sharply on Tuesday, wiping out nearly $300 billion in market value. The stocks declined after reports circulated that South Korean policymakers were considering a new "citizen dividend" funded by taxes on artificial intelligence profits.

Kim Yong-beom, a South Korean government policy chief, suggested that the country could tax profits made from artificial intelligence (AI) companies and use that money to give a "citizen dividend," according to a report.

This made investors nervous because chipmakers could face higher taxes in the future since they earn a lot from the AI boom. Owing to this fear, shares of big chip companies such as Samsung and SK Hynix fell about 4 per cent, while Nvidia, AMD, Micron, and SanDisk also slipped.

Micron fell 2.3 per cent, SanDisk slipped 3.3 per cent, Nvidia declined 0.75 per cent, and AMD lost 2 per cent.

The worry also hit South Korea's stock market hard, with the main index falling more than 5 per cent and wiping out billions of dollars in value after investors quickly sold stocks linked to AI and semiconductors.

After the sharp fall in semiconductor stocks, South Korean officials clarified that the idea was not a new tax on company profits. Instead, Kim said he was only suggesting using extra government tax revenue already coming in from the AI boom and not directly taxing companies like Samsung or SK Hynix.

Another official from the President's office also said that Kim's comment was just his personal opinion and not an official government plan. Soon after, South Korea's stock index improved and closed down only about 2.3 percent instead of the earlier bigger fall.

Deutsche Bank analyst Peter Sidorov said, “Some big overnight market moves came with a sharp drop in the KOSPI as a senior official floated the idea of a 'citizen dividend' on AI profits, which has also weighed on tech sentiment overnight.”