Asian Chip Stocks Tumble as Nasdaq Correction Sparks AI Spending Fears
Asian chipmakers fell sharply Friday, tracking a 5.5% Nasdaq drop, as investors worried Democratic midterm wins could slow US data-center buildouts.
Asian technology stocks tumbled Friday, tracking a sharp sell-off on Wall Street overnight that sent the tech-heavy Nasdaq Composite into correction territory, as renewed concerns over artificial intelligence spending rattled investor sentiment.
South Korean chipmaker SK Hynix plunged over 8%, while Samsung Electronics shed 7%, according to CNBC. LG Innotek and LG Display fell 10% and 7.7%, respectively, as selling pressure spread across the country's technology sector. Seoul's tech-heavy Kospi index slid as much as 8.8%, triggering a circuit breaker that suspended trading for 20 minutes, DW reported.
The rout came as investors worried that Democrats' sweeping victory in the U.S. midterm elections could lead to tighter restrictions on data-center development, potentially slowing demand for AI chips and related infrastructure.
In Japan, semiconductor-related stocks also fell. Chip-testing equipment maker Advantest plunged 12.2%, while Tokyo Electron slid 7.3%, CNBC reported. Technology investment giant SoftBank Group tumbled 11.6%. Memory chipmaker Kioxia Holdings fell nearly 10%, while Renesas Electronics declined 7.5%.
In Taiwan, contract chipmaker TSMC (TSM) slid 9.6%. Electronics manufacturers Hon Hai Precision Industry, also known as Foxconn, and Foxconn Technology fell 9.4% and 9.1%, respectively. Tokyo's Nikkei 225 index fell 5.5% in early trade, while Taiwan's TAIEX index was down more than 8%, DW reported.
China was also caught in the regional sell-off, with the tech-heavy STAR Market and the ChiNext Artificial Intelligence Index both tumbling more than 4%, according to CNBC.
The declines followed a brutal session on Wall Street, where the Nasdaq Composite sank 5.5% and closed more than 10% below its recent peak. The Philadelphia Semiconductor Index plunged 12.2%. The S&P 500 fell 4.4%. The Nasdaq shed as much as $2.5 trillion in market value, DW reported.
The sell-off in Asian equities was exacerbated by investors unwinding positions, stop-loss selling and heightened volatility, Timothy Moe, chief Asia Pacific equity strategist at Goldman Sachs, told CNBC's Squawk Box Asia on Friday. He added that potential political opposition to U.S. data center construction may affect demand and profits for Asian AI hardware suppliers.
Moe said that if there is concern about the speed and magnitude of the U.S. buildout, that puts everything into question, according to CNBC.
Michael McCarthy, chief executive for Australia and New Zealand at online brokerage Moomoo, told Reuters, as cited by DW, that there has been a real shift in sentiment.
In delayed trading, TSMC (TSM) was down 10.8%, Nvidia (NVDA) fell 9.3% and Advanced Micro Devices (AMD) dropped 17.3%.