• Asian chip stocks tumbled, with South Korea's Kospi plunging 10% and triggering trading halts, while Japan's Nikkei fell 4%.
  • U.S. chip names traded lower premarket, including Micron, Super Micro, Intel, and Nvidia, as investors reassess AI spending and valuation risks.
  • The selloff reflects growing anxiety over the return on AI investments and China's technological progress, despite long-term growth prospects.

A Rout Across Asia

Chip stocks extended losses across Asia on Tuesday, following a sharp U.S. selloff driven by concerns over AI spending sustainability and China's rapid tech advancements. South Korea's benchmark Kospi index plunged 10%, triggering two trading halts, with memory giants Samsung Electronics and SK Hynix leading the decline. Japan's Nikkei 225 fell 4%, dragged down by chip-related shares like Tokyo Electron and Advantest.

“The market is waking up to the reality that AI spending may not deliver immediate returns,” said a Tokyo-based analyst who asked not to be named. “Valuations have gotten ahead of themselves.”

U.S. Premarket Pressure

U.S. chip stocks remained under pressure in premarket trading. Micron Technology, a memory chipmaker, slid 3.5%, while Nvidia, the poster child of the AI boom, dropped 2.8%. Intel fell 2.1%, and Super Micro Computer, a server maker tied to AI, declined 4%. The selloff comes after a brutal session on Wall Street, where the Philadelphia Semiconductor Index lost 5%.

“Investors are questioning how much more capex companies can justify,” said a New York-based fund manager. “If AI doesn't start generating profits soon, we could see further cuts.”

Context and Implications

The rout reflects a broader reassessment of the AI trade, which has powered much of the market's gains over the past year. While long-term demand for AI infrastructure remains robust, near-term headwinds include escalating U.S.-China tech tensions, export controls on advanced chips, and signs of memory pricing softness. South Korea's export data has already shown a slowdown in semiconductor shipments, adding to the gloom.

“This is a correction, not a structural breakdown,” said a Seoul-based strategist. “But it could take months for sentiment to stabilize.”

Attempts to reach representatives from Micron, Nvidia, and Intel for comment were unsuccessful.

Correction: An earlier version of this article incorrectly stated the Kospi fell 12%; the correct figure is 10%. We regret the error.