South Korean stocks experienced a sharp downturn on Friday, spearheading losses across the Asian markets. The slump followed a significant decline in Wall Street's technology sector overnight, which spilled over into Asia and pulled benchmark indexes lower.

The benchmark Kospi index was last seen trading down 5.01%. Major tech giants Samsung Electronics and SK Hynix saw their shares drop by 4.34% and 7.57%, respectively. The smaller Kosdaq index also suffered, falling by 4.14%.

Adding to the pressure on South Korea's technology sector, the country's labor minister has called upon its largest tech firms to share more of the profits generated from the AI-driven semiconductor boom with employees and suppliers. The minister expressed concerns that record profits could widen income inequality.

In other Asian markets, Japan's Nikkei 225 lost 1.53%. Australia's S&P/ASX 200 was down 0.61%, while Hong Kong's Hang Seng index retreated by 0.81%. China's CSI 300 saw a marginal decline. Meanwhile, India's Nifty 50 and BSE Sensex showed slight gains, up marginally and 0.23% respectively.

Overnight in the United States, the Dow Jones Industrial Average reached a new all-time high. However, the Nasdaq Composite underperformed as investors appeared to shift away from chip stocks in favor of non-tech equities. The Dow Jones jumped 874.86 points (1.73%) to close at 51,561.93, while the Nasdaq lost 0.09% to end at 26,830.96, and the S&P 500 rose 0.41% to 7,584.31.

This rotation was reportedly triggered by a sell-off in Broadcom, which led investors to reduce their exposure to AI-related stocks. Broadcom's shares plummeted over 12% after its fiscal second-quarter revenue fell short of estimates. Other chip stocks also experienced broad declines, with the VanEck Semiconductor ETF (SMH) dropping more than 1%. Arm Holdings shed over 4%, and Micron Technology fell nearly 8%.

Geopolitical concerns also weighed on the markets, with renewed focus on Middle East tensions. Mixed signals from ongoing negotiations to end the conflict have unsettled global markets and led to a spike in oil and gasoline prices.