Asian chip stocks tumble as Nasdaq correction and AI spending fears hit tech
SK Hynix, Samsung, TSMC, Advantest and SoftBank all fell sharply after the Nasdaq dropped 5.5% and closed in correction territory.
At a glance
- Asian chip stocks fell Friday, tracking a Wall Street sell-off that pushed the Nasdaq Composite into correction territory.
- SK Hynix dropped over 8%, Samsung 7%, TSMC 9.6%, Advantest 12.2% and SoftBank Group 11.6%.
- Investors fear US midterm election results could bring tighter data-center rules and slow AI chip demand.
Asian technology and semiconductor stocks fell sharply on Friday, tracking an overnight sell-off on Wall Street that pushed the tech-heavy Nasdaq Composite into correction territory as concerns about artificial intelligence spending resurfaced.
South Korea's SK Hynix plunged more than 8% and Samsung Electronics shed 7%, while LG Innotek and LG Display fell 10% and 7.7% respectively as selling pressure spread across the country's technology sector.
Japan and Taiwan hit hard
In Japan, chip-testing equipment maker Advantest plunged 12.2% and Tokyo Electron slid 7.3%. Technology investment group SoftBank Group tumbled 11.6%, memory chipmaker Kioxia Holdings fell nearly 10% and Renesas Electronics declined 7.5%.
Taiwanese semiconductor shares also came under heavy selling pressure. Contract chipmaker TSMC slid 9.6%, while electronics manufacturers Hon Hai Precision Industry, also known as Foxconn, and Foxconn Technology fell 9.4% and 9.1%.
The declines followed a brutal session in the US, where the Nasdaq Composite sank 5.5% and closed more than 10% below its recent peak, the common definition of a correction. The Philadelphia Semiconductor Index plunged 12.2%.
Investors are weighing whether Democrats' sweeping victory in the US midterm elections could lead to tighter restrictions on data-center development, potentially slowing demand for AI chips and related infrastructure.
Unwinding and stop-loss selling
Timothy Moe, chief Asia Pacific equity strategist at Goldman Sachs, told CNBC's "Squawk Box Asia" that the Asian sell-off had been exacerbated by investors unwinding positions, stop-loss selling and heightened volatility. He said potential political opposition to US data-center construction may affect demand and profits 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."
The moves come amid mounting concerns over the sustainability of the AI investment boom and the returns on massive data-center spending.
Source: CNBC Top News.
Questions and answers
- Why did Asian chip stocks fall?
- They tracked a 5.5% drop in the Nasdaq Composite and a 12.2% fall in the Philadelphia Semiconductor Index. Investors also worried that US midterm election results could lead to tighter restrictions on data-center development, slowing AI chip demand.
- How much did SK Hynix, Samsung and TSMC fall?
- SK Hynix plunged more than 8%, Samsung Electronics shed 7% and TSMC slid 9.6%. In Japan, Advantest fell 12.2% and SoftBank Group tumbled 11.6%.
- What did Goldman Sachs say about the sell-off?
- Timothy Moe, chief Asia Pacific equity strategist at Goldman Sachs, said the decline was exacerbated by investors unwinding positions, stop-loss selling and heightened volatility, and warned that political opposition to US data centers could hit Asian AI hardware suppliers.
