Asian Stocks Plunge as AI Chip Selloff Hits South Korea and Japan

Asian stock markets tumbled Tuesday as a technology selloff on Wall Street spread across the region, driven by concerns over Chinese semiconductor competition, artificial intelligence (AI) investment returns, and elevated oil prices.

The MSCI Asia Pacific Index declined approximately 2%, heading toward its weakest close since August. South Korea’s KOSPI plunged 7.2% to 5,923.37, its lowest since July, while Japan’s Nikkei 225 dropped 2.7% to 67,200.5.

Wall Street’s semiconductor weakness intensified selling pressure. The Nasdaq Composite fell 0.5% Monday, while the Philadelphia Semiconductor Index sank 2.7%. Nasdaq 100 futures subsequently declined 0.8%, with S&P 500 futures slipping 0.2%.

South Korean semiconductor giants suffered significant losses following reports that Chinese chipmaker CXMT was developing advanced 4F² DRAM technology, potentially challenging established memory-chip manufacturers.

SK Hynix shares plunged 8.9%, Samsung Electronics dropped 8%, and LG Innotek declined 8.9%. Taiwan Semiconductor Manufacturing lost 1.6%, while Foxconn fell 2.1%.

Japanese technology stocks also weakened, with Kioxia tumbling 12.4%, TDK declining 6.2%, and Murata Manufacturing shedding 6.9%.

Concerns surrounding expensive AI infrastructure investments and stretched technology valuations added to market uncertainty. Broadcom CEO Hock Tan warned that some AI investors lacked sufficient understanding of the technologies and businesses receiving their capital.

Meanwhile, Brent crude oil prices eased 1.1% to approximately $105.50 per barrel but remained elevated following Houthi attacks on Saudi Arabian infrastructure.

Investors also assessed President Donald Trump’s claims of a potential Russia-Ukraine energy ceasefire and increased Russian diesel exports, although the proposed arrangements remained uncertain.

Attention now shifts to Wednesday’s U.S. consumer price index report, which could influence Federal Reserve interest rate expectations. Producer inflation and retail sales figures are also scheduled later this week.

In Japan, September producer inflation slowed to 6.8% from 7.6%, although rising import costs continued to complicate the Bank of Japan’s monetary policy outlook.

Australia’s central bank minutes confirmed a unanimous September decision to raise interest rates by 25 basis points to 4.60%.

Meanwhile, major U.S. banks, including JPMorgan Chase, Goldman Sachs, Citigroup, and Wells Fargo, begin reporting third-quarter earnings Tuesday, potentially setting the direction for global financial markets.