Asian technology stocks experienced a significant downturn, tracking a sharp sell-off on Wall Street that pushed the Nasdaq Composite into correction territory. Concerns over AI spending and potential U.S. data-center restrictions led to major plunges for companies like South Korea’s SK Hynix and Samsung, Japan’s SoftBank, and Taiwan’s TSMC. This widespread regional rout underscores investor apprehension about the future of the AI investment boom.
Asian technology stocks faced a brutal sell-off on Friday, echoing a significant downturn on Wall Street overnight that pushed the tech-heavy Nasdaq Composite into correction territory. The market reaction was driven by renewed anxieties regarding artificial intelligence spending and its potential impact on investor sentiment.
South Korea's semiconductor giants bore the brunt of the downturn, with SK Hynix plummeting over 8% and Samsung Electronics shedding a considerable 7%. The selling pressure radiated across the country's tech sector, causing LG Innotek and LG Display to fall 10% and 7.7%, respectively.
This market rout was largely attributed to investor concerns that a sweeping victory by Democrats in the U.S. midterm elections could introduce stricter regulations on data-center development. Such restrictions could potentially curtail demand for AI chips and their associated infrastructure, dampening future growth prospects.
Japan's semiconductor-related stocks also experienced significant declines. Chip-testing equipment manufacturer Advantest plunged 12.2%, while Tokyo Electron slid 7.3%. Tech investment powerhouse SoftBank Group saw its shares tumble 11.6%. Memory chipmaker Kioxia Holdings fell nearly 10%, and Renesas Electronics declined 7.5%.
Taiwanese semiconductor stocks were not immune to the heavy selling pressure. Contract chipmaker TSMC slid 9.6%, while electronics manufacturers Hon Hai Precision Industry (Foxconn) and Foxconn Technology fell 9.4% and 9.1%, respectively, as the regional tech rout deepened.
Even China felt the impact of the regional sell-off, with its tech-heavy STAR Market and ChiNext Artificial Intelligence Index both tumbling more than 4%.
These declines mirrored a severe session on Wall Street, where the Nasdaq Composite sank 5.5% amidst growing apprehension over the sustainability of the AI investment boom and the returns on substantial data-center spending. The index closed more than 10% below its recent peak, officially entering correction territory. The Philadelphia Semiconductor Index, a key barometer for the chip industry, plunged 12.2%.
Timothy Moe, chief Asia Pacific equity strategist at Goldman Sachs, explained to CNBC's "Squawk Box Asia" that the sell-off in Asian equities was intensified by investors unwinding positions, widespread stop-loss selling, and heightened market volatility. He further noted that potential political opposition to data center construction in the U.S. could negatively affect demand and profitability for Asian AI hardware suppliers. "If there's concern about the speed and magnitude of buildout in the U.S., then obviously that's going to put all that into question," Moe said. "The market's tendency is always to shoot first and ask questions later. I think that's exactly what's happening now."
