Asian Chip Stocks Slide as Global AI Sell-Off Deepens

Technology stocks across Asia came under heavy selling pressure on Friday as weakness in U.S. semiconductor shares spilled over into regional markets. The broad decline followed another volatile session on Wall Street, where investors continued to reduce exposure to artificial intelligence-related stocks amid concerns that the industry's rapid investment cycle may be becoming increasingly difficult to justify.

Japan's technology sector led the regional losses. SoftBank Group fell more than 9%, while semiconductor equipment manufacturers Tokyo Electron and Advantest declined over 8% and 7%, respectively. Japanese memory chipmaker Kioxia dropped more than 16% after a U.S. federal jury ordered the company to pay $229 million in damages for infringing a Viasat patent related to computer memory technology.

Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chipmaker, also came under pressure, falling more than 7%. The decline came despite the company reporting quarterly profit that exceeded market expectations and raising its full-year capital expenditure forecast to between $60 billion and $64 billion, up from its previous guidance of $52 billion to $56 billion. Investors instead focused on whether continued increases in AI infrastructure spending can support current market valuations.

Chinese technology stocks also weakened as negative sentiment spread across the region. Shares of Tencent, Meituan, Kuaishou, Baidu and Alibaba all closed lower, reflecting broader investor caution toward growth-oriented technology companies and AI beneficiaries.

The weakness mirrored another difficult trading session in the United States. The Nasdaq Composite declined 1.47%, while the VanEck Semiconductor ETF fell nearly 4%. Major AI-related chip companies including Arm Holdings, Micron Technology, Advanced Micro Devices and Broadcom each posted losses of more than 5%. U.S.-listed shares of South Korean memory chipmaker SK Hynix also dropped sharply.

Market strategists said the latest sell-off was driven more by profit-taking than by a deterioration in industry fundamentals. According to Andrew Jackson, strategist at Ortus Advisors, investors viewed TSMC's latest earnings as insufficient to justify another leg higher for AI-related stocks, prompting a broad unwinding of crowded momentum trades.

The recent correction marks a notable shift in market sentiment after months of strong gains fueled by enthusiasm surrounding artificial intelligence. While long-term demand for AI infrastructure remains intact, investors are becoming increasingly selective as questions grow over whether current valuations and aggressive capital spending plans can be sustained over the longer term.