Asian semiconductor stocks sell off sharply as AI investment doubts mount

Asian semiconductor stocks, including Samsung Electronics and SK hynix, sold off sharply Tuesday as growing skepticism over the sustainability of AI infrastructure investment rattled markets across the region.

As of 2:20 p.m. Korean Standard Time Tuesday, Japan's Nikkei 225 had fallen more than 4%, dropping below the 62,000 level for the first time since late May, while the Topix slid about 3%.

Kioxia, the NAND flash memory chip manufacturer, plunged 18.3% to 44,550 yen ($272), shrinking its market cap to 24.41 trillion yen. Semiconductor equipment makers also tumbled in tandem — Tokyo Electron fell 11.2%, Renesas 10.6%, Lasertec 14.4% and Advantest 10.4%.

Taiwan was swept up in the selling as well. The Taiex plunged more than 4% during trading, falling to around the 41,600 level.

TSMC, which accounts for more than 40% of Taiwan's total stock market capitalization, deepened its losses and was trading down 2.8% at 2,285 New Taiwan dollars, reducing its market cap to about 59.3 trillion New Taiwan dollars. Taiwanese chip designer MediaTek was also trading sharply lower, down 9.9%.

The Kospi plunged more than 10% Tuesday, triggering a circuit breaker, while the Kosdaq fell more than 8% and also had trading temporarily halted. Samsung Electronics and SK hynix extended their losses, each falling between 12% and 13%.

The broad selloff in Asian semiconductor stocks reflects spreading doubts about the sustainability of US-driven AI infrastructure investment. Concerns that surging memory chip prices could dampen demand or prompt a shift to alternatives are also weighing on investor sentiment.

Alphabet, Google's parent company, disclosed a free cash flow deficit in the second quarter, and Nvidia's share price has fallen sharply in recent sessions, ceding its position as the world's most valuable company by market capitalization to Apple.