SK hynix Inc. (SKHY) stock fell over 5% Tuesday as investors reacted to intensifying competition from China's ChangXin Memory Technologies and a broader selloff across AI-linked semiconductor stocks.

The South Korean memory-chip leader plunged more than 10% in Seoul, while its U.S.-listed shares were down about 5% in premarket trading. Rival Samsung Electronics Co. Ltd. (SSNLF) dropped 7.4%, with both stocks hitting their lowest levels since August.

CXMT Progress Raises Competition Concerns

Reportedly, China's ChangXin Memory Technologies said it made progress on a new chip architecture designed to pack more memory into a smaller space.

The development raised concerns that Chinese producers could eventually add more supply and challenge established memory leaders including SK hynix, Samsung and Micron Technology Inc. (MU).

UBP Senior Equity Advisor Vey-Sern Ling told CNBC on Monday that investors were "jittery and looking for excuses to take profit on AI-related stocks that have outperformed this year, especially memory stocks."

He added that Chinese memory makers could affect the global supply-demand balance over time, though they still face technology hurdles in advanced memory such as HBM.

Experts Say HBM Leadership Remains Intact

Rayliant Global Advisors Chief Market Strategist Phillip Wool said CXMT's progress marked a significant milestone for Chinese chipmakers, but he argued that the immediate threat remains limited.

"More importantly, we're not even talking about HBM here, and the Korean chipmakers are still unquestionably dominating that space, with very little threat at all from the likes of CXMT or anyone else for the foreseeable future," Wool said.

He said the sharp selloff reflected broader nervousness around the AI trade rather than a major change in the competitive landscape.

"I read that more as a sign of how vulnerable AI sentiment is at this moment," Wool said.

Broader AI Selloff Adds Pressure

The weakness extended across global technology stocks. Micron fell about 3% in U.S. premarket trading, while Sandisk Corp. (SNDK), Seagate Technology Holdings Plc. (STX) and Western Digital Corp. (WDC) were also down around 4-5%.

Investors are also weighing concerns about AI financing after the chief executives of Intel Corporation (INTC) and Broadcom Inc. (AVGO) warned that access to capital could become a constraint on the AI boom.

SKHY Price Action: SK hynix shares were down 5.32% at $153.60 during premarket trading on Tuesday, according to market data.