Asian Tech Stocks Slide as Hot US Inflation Data Rattles AI Sector

Major stock indexes in Japan and South Korea tumbled Thursday as a deepening technology sell-off followed higher-than-expected U.S. inflation figures.

South Korean markets led the regional decline, with the benchmark Kospi index falling 7.7% to 5,548.78. Memory chip giants faced heavy losses as SK Hynix plunged 11.4% and Samsung Electronics dropped 9.5%, according to Euronews. These sharp falls come after the Kospi reached an all-time high above 9,000 in June, a peak driven by global excitement over artificial intelligence.

In Japan, the Nikkei 225 fell 4.8%, while Taiwan’s Taiex dropped 3%. Reports on SoftBank Group's performance varied slightly, with outlets recording losses between 7.9% and 9.4%. Semiconductor equipment manufacturers were also hit, as Advantest plunged nearly 14% and Tokyo Electron lost at least 6.45%. TSMC shares in Taiwan declined roughly 2% ahead of the company's earnings report.

The downturn follows Wednesday's session on Wall Street, where the Nasdaq composite slipped 1.9%. New data showed the U.S. consumer price index rose 3.7% year-on-year in September, exceeding expectations. This has fueled investor concerns that the Federal Reserve may raise interest rates further, potentially increasing the cost of financing the massive infrastructure projects required for AI expansion.

Market sentiment was further pressured by warnings from industry leaders. Broadcom CEO Hock Tan recently stated that financing could pose a greater challenge to AI growth than shortages of chips or electricity. Additionally, some investors are weighing the risk of a memory chip oversupply as early as 2029 as manufacturers continue to expand production capacity.

Background

The International Monetary Fund recently warned of slowing growth in Asia and potential spillover effects from rising bond yields. This economic backdrop coincides with U.S. Treasury yields climbing above 5%, adding pressure to capital-intensive technology investments.