Nasdaq Sell-Off Batters Asian Chip Stocks as SK Hynix, Samsung, SoftBank, and TSMC Tumble
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Asian technology stocks tumbled after a sharp drop on Wall Street pushed the tech-heavy Nasdaq Composite into correction territory. The overnight market decline came as renewed worries about artificial intelligence spending rattled investor sentiment.
Those worries grew because investors feared that a sweeping victory by Democrats in the United States midterm elections could lead to tighter rules on building data centers. Markets worried those tighter rules would slow down the demand for artificial intelligence chips and related hardware.
Selling pressure quickly spread across South Korea. Chipmaker SK Hynix plunged more than 8%, while Samsung Electronics shed 7%. The losses widened as LG Innotek fell 10% and LG Display dropped 7.7%.
Semiconductor and technology stocks dropped across Japan as well. Chip-testing equipment maker Advantest plunged 12.2%, Tokyo Electron slid 7.3%, and technology investment giant SoftBank Group tumbled 11.6%. Memory chipmaker Kioxia Holdings fell nearly 10%, and Renesas Electronics declined 7.5%.
Taiwan's semiconductor stocks faced heavy selling pressure too. 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%, respectively.
China was caught in the regional drop as well. The tech-heavy STAR Market and the ChiNext Artificial Intelligence Index both tumbled more than 4%.
These regional drops followed a brutal session on Wall Street. The Nasdaq Composite sank 5.5% and closed more than 10% below its recent peak as people questioned the long-term strength of the artificial intelligence boom and financial returns on massive data center spending. The Philadelphia Semiconductor Index plunged 12.2% during that same session.
Timothy Moe, chief Asia Pacific equity strategist at Goldman Sachs, said investors unwinding positions, stop-loss selling, and high market volatility made the Asian sell-off worse. He noted that potential political opposition to building U.S. data centers could hurt demand and profits for Asian artificial intelligence hardware suppliers.
If people worry about how fast and large the infrastructure buildout in the United States will be, that puts the entire outlook into question, Moe said on a television broadcast. He added that the market's natural tendency is to shoot first and ask questions later, which is what is happening right now.
Summary
A sharp drop on Wall Street triggered a major sell-off across Asian technology markets, as investors worried that U.S. political changes could slow down data center development and artificial intelligence spending.