Asian stock markets saw widespread declines, especially in tech-heavy regions, as a sell-off in AI-related chip stocks intensified. Japan's Nikkei 225 plummeted by 6.0% (around 4,000 points) to 62,809.07, with major chip-related companies like Advantest, Tokyo Electron, and Kioxia Holdings Corp. experiencing significant losses exceeding 10%. Kioxia, for instance, collapsed 16%, losing more than half its value since reaching a record high last month. The broader TOPIX index, however, edged 0.5% higher on one of the days, suggesting a more targeted tech sector downturn.
South Korea's KOSPI index bore the brunt of the selling, falling as much as 6.3% on one day and 5.1% to 7,877.45 on another. Chip giants suffered significantly, with SK Hynix dropping 7.7% to 9.89% and Samsung Electronics tumbling 6.4% to 6.8%. Memory chip maker SK Hynix fell to its lowest level since June 1. Taiwanese markets also suffered, with the Taiex declining by 1.1% to over 5%. Taiwan Semiconductor Manufacturing Corp. (TSMC), a key AI chip producer, retreated by 1.8% to around 5% even after announcing record second-quarter profits and plans for a $100 billion investment in Arizona.
Analysts attributed the sell-off to investors reassessing the lofty valuations of AI and semiconductor stocks following a powerful rally throughout the year. Fawad Razaqzada, a market analyst at Forex.com, noted that the rally in AI-related stocks appeared to be losing momentum after months of uninterrupted gains, with some investors questioning if the enormous sums committed to AI infrastructure could generate sufficient returns. Others suggested it might be a period of profit-taking and portfolio rotation, moving capital from richly valued semiconductor names to sectors with more attractive valuations and steadier earnings visibility. Despite the regional tech rout, SoftBank Group Corp. saw a 1.5% increase after reports of revived talks for a $10 billion loan backed by its OpenAI stake, intended to support its AI investment plans.
