China's Indexes Tumbled as Chip Stocks Plunged Driven by AI Trade Worries

Li Chen
28 Jul, 2026
Hong Kong

China's benchmark indexes declined sharply as semiconductor stocks extended their selloff amid intensifying competition and growing worry over AI circular financing. 

The Hang Seng Index decreased 0.5%, and the mainland-focused CSI 300 Index dropped 2.7% as investors turned away from high-flying semiconductor stocks for the third consecutive week. 

Market sentiment reversed a day after the listing of memory-chip maker CXMT, which soared more than 460% on its first day of trading. 

The sell-off in computer chip stocks dragged down market indexes in Japan by 4% and in South Korea by 8% amid growing unease over the sustainability of AI infrastructure spending and circular AI finance arrangements. 

China's benchmark indexes have struggled to rise above the flatline for three consecutive weeks as investors question the valuation of semiconductor-related companies and look for clues about monetization plans for AI-related investments. 

The Brent crude oil price decreased 0.9% to $87.25 a barrel after the U.S. and Iran paused military exchanges for the second consecutive day. 

However, tensions remained high in the Middle East as the Iran-backed Houthi rebels continued to target Saudi vessels passing through the Red Sea, destabilizing global crude oil shipments.   

 

China Indexes and Stocks 

The Hang Seng Index decreased 0.5% to 25,085.68, and the mainland-focused CSI 300 Index fell 2.7% to 4,576.58. 

Semiconductor- and AI-related stocks led decliners in Shanghai and Hong Kong, as investors worried that the rising competition and cooling demand could exacerbate market conditions. 

Cambricon Technologies decreased 6.1% to ¥1,165.32, GigaDevice Semiconductor plunged 10% to HK $460.60, SMIC fell 1.8% to HK $69.40, and Zhongji Innolight declined 12.2% to ¥946.01. 

CXMT Corp. dropped 1.6% to ¥48.20 a day after surging more than 460% on its first trading day in Shanghai.