Chip Rout Deepens on Circular Funding, China Fears | The Asia Trade 7/28/2026

Artificial Intelligence & Semiconductor Industry Trends - Artificial Intelligence chipmaker Nvidia faces market scrutiny over circular financing risks, including guaranteed investments and customer backstops to sustain massive growth rates [5][6][8][9] - Nvidia invests 5 million dollars in artificial intelligence startup Safe Superintelligence and plans 2 gigawatts of data centers with SK Group [19][49][118] - Major cloud hyperscalers push into negative free cash flow territory due to skyrocketing infrastructure and capital expenditure demands [10] - A Shanghai-based firm backed by the Chinese state begins mass-producing Deep Ultraviolet (DUV) lithography machines, targeting 5 units this year and 20 units next year to build a domestic chip supply chain, posing potential threats to ASML and causing ASML shares to slide by more than 8% [1][18][50][93] - South Korea's KOSPI index trades at less than 6 times forward earnings, with SK Hynix shares dropping roughly 40% and wiping out nearly 500 billion dollars in value, while trading below its July 9 IPO price [2][43][55][58] - Token consumption metrics across major technology firms grow 4X to 5X over the past year, driving underlying demand for data center chips [16][17] Macroeconomics & Energy Markets - Brent crude trades below 90 dollars a barrel while dropping 8.7%, though remaining up about 20% for the month, driven by eased Middle East supply threats and U.S.-Iran ceasefire discussions mediated through Oman [1][3][28][36][128] - U.S. WTI crude declines by 0.6% amid ongoing negotiations between the U.S. and Iran to end the conflict [4][28] - Central bank policy expectations price in a 34% chance of a Bank of Japan rate hike next month and about a 40% chance of a Federal Reserve rate hike, as investors grow concerned that central banks are falling behind the curve on inflation [24][25] - China commits to capping replacement tariffs on U.S. goods at 20%, while current tariffs stand at 12.5% amid U.S. probes into forced labor and overcapacity [38][39][144] - Global mining companies BHP and Rio Tinto experience stable iron ore demand and high copper prices, with copper trading consistently above 13,000 dollars a ton [164][165][169]