Global stocks edged lower on Tuesday as renewed concerns about competition in the artificial intelligence industry triggered a sharp selloff in Asian chipmakers, prompting investors to seek safety in government bonds.

Reports of progress by Chinese memory chipmaker CXMT raised concerns that intensifying competition could disrupt the profitability of established semiconductor companies.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell more than 2% to its lowest level since late July, while its main global equities index slipped 0.14%. The declines highlighted growing uncertainty over whether the investment boom powering AI-related stocks can sustain its momentum.

South Korea’s KOSPI, a key market for the global AI industry, plunged more than 5%, marking its steepest one-day decline since mid-August.

Samsung Electronics shares fell 7.4%, while SK Hynix dropped 10%. Taiwan Semiconductor Manufacturing Company declined 1.8%, and Japanese investment conglomerate SoftBank, which has substantial exposure to AI, lost 8%.

US stock futures also weakened. Nasdaq futures fell 0.5%, while Micron Technology shares dropped 2.5% in premarket trading and Nvidia slipped 0.6%.

The selloff followed reports of progress by China’s ChangXin Memory Technologies, or CXMT, raising the prospect of stronger competition in memory chips used in AI systems.

Investors have poured money into semiconductor companies over the past four years as technology firms expanded spending on AI infrastructure. That investment has supported corporate earnings and economic growth, but concerns about concentrated market exposure and the timing of future returns are increasingly influencing sentiment.

Julien Lafargue, chief market strategist at Barclays Private Bank, said investors were becoming more aware that the memory chip industry remained cyclical and vulnerable to disruption.

The latest developments could bring forward expectations of tougher competition, potentially affecting pricing power and profit margins across the semiconductor sector as early as next year.

European stocks moved in the opposite direction. The STOXX 600 rose 0.5% to a one-week high, supported by the region’s relatively limited exposure to technology stocks and lower oil prices.