Key Takeaways
- Asian chip stocks plunged as AI-related shares extended a global sell-off.
- Analysts view the decline as a valuation reset, not a fundamental downturn.
- Chinese internet stocks outperformed despite broad weakness in regional technology shares.
Asian technology stocks extended losses Wednesday as semiconductor companies fell sharply following another weak session on Wall Street. Investors continued selling AI-related shares in Asian tech stocks amid concerns over valuations, financing and growing competition.
Asian tech stocks declined after U.S. semiconductor shares posted broad losses overnight. South Korean chipmaker SK Hynix dropped more than 15% after reporting record quarterly profit and revenue that still fell short of analysts’ expectations. Samsung Electronics lost more than 8%, while LG Innotek fell 15% and Seoul Semiconductor declined 10%.
In Japan, SoftBank Group fell nearly 10%, extending losses among companies tied to artificial intelligence investments. Computer memory maker Kioxia dropped 14%, while semiconductor equipment supplier Tokyo Electron fell 12.6%. Taiwan Semiconductor Manufacturing Co. (TSMC), which has ridden the AI chip boom in recent quarters, also declined 3.9%.
Analysts see market reset, not fundamental weakness
Market analysts said the sell-off in Asian tech stocks reflects weaker investor sentiment rather than worsening business conditions.
“The latest weakness in Asian chip stocks reflects the ongoing deleveraging process in Korea and softer sentiment towards global technology stocks,” Kieron Poon, investment director of Asian equities at Aberdeen Investments, said in a Tuesday note.
Poon said the recent market swings have not changed the firm’s long-term outlook.
“The recent market pullback has brought valuations to more attractive levels, creating opportunities for us to add exposure to high-quality businesses at more reasonable prices,” he said.
David Riedel, founder and president of Riedel Research Group, also described the decline as a market adjustment rather than a lasting downturn.
“The recent pullback in AI-related chip stocks reflects investors giving back a little bit of the froth that was in the AI market,” Riedel said during CNBC’s “Squawk Box Asia.”
He added that concerns over AI financing and increasing competition from Chinese companies have pressured sentiment, but said memory chipmakers “will be fine” after giving back some recent gains.
Chinese internet firms buck regional trend
The regional decline in Asian tech stocks followed another weak trading session for U.S. semiconductor companies.
Nvidia opened lower before ending the session unchanged. Intel fell nearly 6%, while AMD lost 8%. Micron and Seagate each declined more than 8%, Western Digital dropped nearly 7%, and Sandisk lost 14%. U.S.-listed shares of SK Hynix also fell 9%.
Elsewhere in Asia, Taiwan’s TSMC continued to trade lower, while China’s technology sector showed mixed performance. The ChiNext 300 Index slipped 0.63%, and the Hang Seng China Semiconductor Chips Index fell more than 6%.
However, several major Chinese internet companies listed in Hong Kong outperformed the broader market. Tencent gained about 4%, while Meituan rose 2.49%. Alibaba, Baidu and Kuaishou also traded higher, resisting the broader weakness affecting semiconductor and AI-related stocks.
Investors continue monitoring earnings reports, demand for AI infrastructure and broader market conditions, with CNBC reporting that the latest sell-off in Asian tech stocks signals a temporary correction rather than the start of a longer period of weakness in technology shares.
