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Semiconductor shares tumbled sharply across Asia on Tuesday, extending a broader rout in global chipmakers following a weak session on Wall Street. According to market data, SK Hynix plunged more than 13%, while Samsung Electronics fell over 12%, leading a heavy sell-off in artificial intelligence-linked equities.
Asian Chip Stocks Plunge Amid Wall Street Weakness
The regional sell-off hit major memory producers and component suppliers hard as investors reassessed valuations. According to Bloomberg reporting, Samsung SDI dropped over 10%, LG Innotek slid nearly 18%, Seoul Semiconductor fell about 7%, and LG Chem lost more than 6%. Japanese markets mirrored the downward trend, with Tokyo Electron dropping almost 11%, Advantest sliding over 10%, and computer memory manufacturer Kioxia plunged more than 18%. SoftBank Group, a major AI investment proxy through its stake in Arm, fell 6.3%, while Taiwan Semiconductor Manufacturing Company declined 2.9%. In mainland China, the tech-heavy ChiNext 300 index fell 4.7% and the Hang Seng China Semiconductor Chips Index dropped 5%.
The losses followed a steep downturn in the United States, where the VanEck Semiconductor ETF (SMH) lost more than 2% on Monday, adding to losses from Friday. Advanced Micro Devices (AMD) and Teradyne dropped 5% and 4% respectively, while Micron Technology shed about 2%.
The Intertwined AI Trade and Valuation Concerns
The synchronized weakness highlights how closely Asian technology shares and the United States artificial intelligence trade are linked. Samsung Electronics and SK Hynix rank among the world’s largest suppliers of high-bandwidth memory chips utilized in AI servers, leaving their valuations highly sensitive to shifts in capital expenditure expectations among American hyperscalers.
According to Owen Lamont, senior vice president at Acadian Asset Management, sharp swings in equities like SK Hynix underscore deep uncertainty surrounding the current AI investment cycle. Investors still lack clear visibility into how the technology will ultimately impact the broader economy, Lamont told CNBC, adding that current market conditions will likely remain volatile. He also noted that leveraged exchange-traded products across South Korea, Hong Kong, and the United States are magnifying these market fluctuations.
Broker Reports and Long-Term Market Fundamentals
Sundeep Gantori, chief investment officer for equities at Standard Chartered, pointed out that sentiment toward semiconductor stocks also deteriorated following recent media reports regarding China’s ambitions in memory chips and lithography equipment. However, Gantori emphasized that the long-term outlook remains intact, stating that the market opportunity is large enough for multiple players to coexist as the AI investment cycle supports leading firms.
Gantori also noted that recent broker reports projecting a memory price peak in 2027 contributed to the weakness in South Korea. While Standard Chartered expects memory prices to peak next year, Gantori stated that overall risk-reward dynamics have improved at current valuations.