Asian semiconductor stocks suffered their sharpest sell-off in months on Wednesday as disappointing earnings from South Korea SK Hynix deepened fears that the artificial intelligence boom that powered global markets for two years may be losing momentum.
Seoul Kospi index, which is dominated by chip manufacturers, slid by as much as 12.6 percent during the session, following a near 11 percent slump the previous day. The benchmark fell to its lowest level since early April and is now headed for a record two-day drop of more than 40 percent from a peak reached just over a month ago. Japan Nikkei declined 1.5 percent in sympathy.
SK Hynix, one of the world two dominant suppliers of high-bandwidth memory chips essential for AI data centers, reported record profits for the second quarter but still undershot investors elevated expectations. The results triggered a wave of selling that spread across Asian markets, with chip-linked stocks in Taiwan and Japan also taking heavy losses.
The sell-off extended a global rout that began on Wall Street earlier this week, where the tech-heavy Nasdaq composite fell sharply as investors reassessed the valuations of companies that have benefited most from the AI boom. Nvidia, the bellwether of the AI chip sector, saw its shares drop in pre-market trading as the Asian weakness fed through to US futures.
Analysts said the market was undergoing a correction after months of relentless gains driven by AI optimism. The CBOE Volatility Index, often referred to as Wall Street fear gauge, ticked higher as traders braced for continued turbulence.
The sell-off in tech stocks unfolded alongside rising geopolitical anxieties that have pushed oil prices higher and complicated the inflation outlook for central banks. The US Federal Reserve is widely expected to hold interest rates steady at its upcoming meeting, but the combination of AI valuation concerns and energy price pressures is testing investor confidence.
Despite the sharp declines, some analysts cautioned against declaring the end of the AI cycle, noting that demand for chips used in data centers remains robust. SK Hynix itself forecast that global demand for high-bandwidth memory would continue to grow through the second half of the year.
European markets opened lower in sympathy with Asia, while US futures pointed to a weak open on Wall Street. The simultaneous sell-off across regions highlighted the interconnected nature of the global AI supply chain, where a single earnings miss in Seoul can reverberate from Tokyo to New York within hours.
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