A significant tech sell-off impacted Asian markets on Friday, with notable declines observed in South Korea and Japan, raising fresh concerns about the stability of the AI-driven chip rally. By midday local time, South Korea’s Kospi index plummeted over 8%, severely affected by a downturn in major chipmakers such as Samsung Electronics and SK Hynix, both of which were reported to have dropped around 9%.
Meanwhile, Japan’s Nikkei 225 experienced a decline of approximately 5%, largely attributed to a dramatic 14% slump in SoftBank Group’s shares following a New York Times report. This report suggested that OpenAI, one of SoftBank’s prominent AI investments, might postpone its initial public offering until the following year, unsettling investors.
Hong Kong’s Hang Seng Index also faced pressure, retreating by more than 2%. Alibaba, in particular, faced a sharp downturn, tumbling another 5% as Anthropic accused the Chinese tech giant of misusing its advanced AI models.
The sell-off was primarily driven by a reevaluation of memory chip demand amid rising prices for Apple’s Mac and iPad products. Apple cited an unprecedented shortage of memory chips caused by surging AI data center demand, prompting concerns about the elasticity of demand in the market. Fabien Yip, a market analyst at IG, highlighted that Apple’s struggles to absorb cost increases and its need to pass them onto consumers raised critical questions regarding the sustainability of current memory chip margins, which are integral to the AI investment narrative.
This downturn followed a brief recovery on Thursday, when Micron Technology reported stronger-than-expected earnings, momentarily boosting sentiment regarding AI-related demand. South Korea, having been one of the top-performing equity markets globally this year, witnessed sharp fluctuations, reflecting the tech sector’s volatility. The market had earlier plunged about 10% earlier in the week before experiencing a temporary rebound over the subsequent sessions. Likewise, Japan’s market had enjoyed considerable gains due to the AI boom but is now also reflecting the uncertainties surrounding the semiconductor sector.
Overall, the recent sell-off underscores the fragility of investor confidence in the longevity of the AI-driven investment landscape, suggesting that shifts in demand and pricing could have far-reaching implications for the tech sector in the coming months.
