Tech Sector Under Pressure: A Wave of Sell-offs Sweeps Through Asian Stock Markets

Asian stock markets followed the downward trend set by the U.S. Nasdaq Composite amid a massive sell-off by investors in the technology sector. The fast-growing South Korean market was hit hardest, with the Kospi index falling more than 8% during trading, triggering an automatic 20-minute trading halt. Later, the Kospi’s decline slowed slightly—at the time of publication, it was down about 6%. Since the start of the week, it has fallen 7%.

The downward trend has affected the entire technology sector in the Asian region, according to CNBC. Shares of leading memory chip manufacturers—SK Hynix and Samsung—fell by more than 9% and 10%, respectively. Shares of the investment holding company SK Square fell by approximately 11%, while LG Electronics shares lost 6.8%.

On the Japanese market, the market capitalization of semiconductor equipment manufacturer Advantest fell by more than 10%, while Tokyo Electron’s shares dropped by more than 5%. Meanwhile, SoftBank Group’s shares plummeted 14%, marking one of the company’s sharpest intraday declines in the past two years. Pressure on the Japanese holding company—a major investor in OpenAI—came from reports that the startup may postpone its IPO until next year, according to Bloomberg. This sparked concerns among market participants about a delayed return on their investments and weighed on sentiment across the entire Asian tech sector.

In Taiwan, TSMC shares fell 1.88%, while shares of Foxconn, a major electronics assembler, dropped 2.91%.

The high-tech sector in Greater China also saw a decline. On the Hong Kong stock exchange, Tencent shares fell 2%, Alibaba shares fell 5%, Baidu shares fell nearly 4%, and Xiaomi shares fell 3.5%. In the semiconductor sector, chipmaker SMIC suffered the most significant losses, with its stock price falling by more than 6%.

The decline in Asian indices was preceded by a drop in the U.S. stock market. The Nasdaq Composite technology index closed lower for the fourth consecutive session the previous day, losing 0.46%. One of the main triggers for the decline on Wall Street was Apple’s announcement that it would raise prices for MacBook laptops and iPad tablets due to rising component costs, including semiconductors. This move heightened investors’ concerns that rising chip prices would lead to lower profit margins for major technology corporations.

“The markets no longer view strong performance in the memory sector as an unconditional positive for the entire AI sector,” noted Charu Chanana, chief investment strategist at Saxo Markets in Singapore. “This confirms the high demand for AI infrastructure, but at the same time increases the cost of developing and deploying artificial intelligence technologies. There is a risk that the strong cycle in the memory segment today will begin to slow down the development of the AI industry as a whole tomorrow. And the market is already beginning to price in this risk” (quoted by Bloomberg).

This article was AI-translated and verified by a human editor