The sharp declines in SoftBank, Tokyo Electron and Advantest alongside a steep drop in Samsung Electronics and SK Hynix point to renewed investor anxiety over the sustainability of massive AI related capital spending, following overnight weakness in US listed chipmakers. The relatively modest fall in Japan’s broader Topix compared with the tech heavy Nikkei suggests the selloff remains concentrated in AI and semiconductor exposed names rather than reflecting a broad deterioration in market sentiment. Lower crude oil prices, tied to hopes for a Middle East peace deal, provided some offsetting support to non-tech shares in Japan, cushioning the overall market impact. The scale of Korea’s decline, sufficient to trigger a sell-side circuit breaker, signals particularly acute stress in Korean semiconductor names and could keep volatility elevated across the region’s chip sector in the near term.
Earlier:
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Renewed fears over AI spending sustainability triggered a sharp selloff in Asian tech and chip stocks, hitting Japan’s Nikkei and forcing a circuit breaker on Korea’s KOSPI.
Summary:
- Japan’s Nikkei fell around 2%, dragged down by heavyweight AI and chip related stocks, even as the broader Topix index shed a much smaller circa 0.4%
- The declines followed an overnight slide in US listed chipmaker AMD and SpaceX, reviving concerns about the scale of AI related spending
- SoftBank Group fell around 6.5%, Tokyo Electron dropped roughly 6%, and Advantest slipped around 4%
- Lower crude oil prices, on hopes of a Middle East peace deal, helped support the broader Japanese market outside of tech
- South Korea’s KOSPI plunged, triggering a sell-side circuit breaker after KOSPI 200 futures fell 5% or more within a minute, with the index dropping over 4.5% and falling below the 6,300 level
- Samsung Electronics fell around 6% and SK Hynix dropped roughly 9% as Korean semiconductor names led the decline
Asian equity markets came under heavy pressure as a fresh wave of concern over the sustainability of artificial intelligence related spending swept through technology and semiconductor stocks in both Japan and South Korea.
Japan’s Nikkei share average fell around 2% on Thursday, weighed down by heavyweight technology names even as most other stocks on the index posted gains. The tech heavy benchmark briefly fell just over 2% before settling roughly 1.8% lower on the day. Of the index’s 225 components, more than twice as many stocks rose as fell, underscoring that the losses were concentrated rather than broad based.
The declines tracked an overnight slide in US listed chipmaker AMD and space technology company SpaceX, which reignited investor concerns about the scale of capital being poured into AI infrastructure. Heavily weighted AI related names bore the brunt of the selling, with AI focused investor SoftBank Group falling around 6.5%, chip equipment maker Tokyo Electron dropping roughly 6%, and chip testing equipment manufacturer Advantest slipping around 4%.
By contrast, Japan’s broader Topix index fell a much smaller circa 0.4%, highlighting how concentrated the selloff was in semiconductor and AI adjacent names. Nomura Securities equities strategist Wataru Akiyama said the outsized weighting of semiconductor related stocks in the index made the selloff appear more severe than the underlying shift in market sentiment, adding that the broader market found support from falling oil prices tied to hopes for a Middle East peace deal. SoftBank Group was due to report earnings after the market close.
The pressure was even more pronounced in South Korea, where the KOSPI index plunged sharply enough to trigger a sell-side circuit breaker, a mechanism that suspends the effectiveness of program sell orders for five minutes when KOSPI 200 futures fall 5% or more within a single minute compared with the previous day’s close. According to the Korea Exchange, the circuit breaker was activated shortly after 10am local time.
The KOSPI opened down around 1.8% from the previous close and extended its losses through the morning session, falling roughly 4.6% and dropping below the closely watched 6,300 level. Korean semiconductor bellwethers led the decline, with Samsung Electronics falling around 6% and SK Hynix dropping roughly 9%, reflecting the intensity of the selloff among chip focused names most exposed to the AI spending narrative.
Together, the moves in Tokyo and Seoul illustrate how quickly sentiment toward AI related capital expenditure can shift across regional markets, with a single overnight move in US chip and space technology stocks translating into significant single day losses for some of Asia’s largest technology and semiconductor companies.
This article was written by Eamonn Sheridan at investinglive.com.
