AEM and other Singapore chip stocks tumble after Wall Street hits a tech rout

It also faced supply disruptions that limited its ability to fully capitalise on growing demand for data-centre chips.

Intel chief executive Tan Lip-Bu reportedly told analysts on a conference call that the company faces near-term challenges, including manufacturing supply shortages, an unprecedented memory crunch, and softness in personal computer demand as a result.

Singapore’s AEM has a long-standing, strategic relationship with Intel as a key supplier of advanced semiconductor test solutions.

Meanwhile, Google’s Alphabet closed over 12% lower on Oct 29, too, wiping out roughly US$500 billion in market value in what reports called its “worst day ever”.

This sell off came after the tech giant’s third quarter earnings fell short of analysts’ profit expectations.

The ripples were also felt in the Asian region, with South Korea’s Kospi index falling some 5% during morning trading on Oct 30. The index is also home to global chip firms like SK Hynix and Samsung Electronics.

Saxo Markets chief investment strategist Charu Chanana said the latest tech earnings confirm that AI demand is still booming, but investors are becoming much harder to impress.

“AI demand is not the problem. The challenge is increasingly about the cost of meeting that demand and how much of the growth eventually translates into profits and cash flow,” she said in a research note on Oct 30.

She noted that cloud providers are growing rapidly, semiconductor and memory companies are enjoying exceptional demand, and AI is beginning to generate revenues for software businesses.

“Yet, strong results have not always been rewarded by investors. Higher spending, uncertain future margins and elevated valuations are making markets more selective,” she said.

She added that the issue now is that the cost of supplying AI demand rises faster than the profit it generates.

“For investors, the distinction between companies capable of financing investment through recurring cash flow and those reliant on external capital is becoming more important.”