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Asian stocks slid sharply on Tuesday, with South Korean and Japanese markets taking the brunt of the damage as investors reacted to fresh worries about artificial intelligence-related investment and its implications for chipmakers. Regional sentiment was further dented by weakness in U.S. futures - Nasdaq 100 Futures fell 0.7% and S&P 500 Futures slipped 0.2% - after Wall Street closed mixed and erased the bulk of its gains overnight.
Chip sector rout intensifies in Korea and Japan
South Korea's benchmark KOSPI plunged more than 9% to its weakest level since mid-April, a slide severe enough to prompt sidecar and circuit-breaker mechanisms earlier in the session. In Japan, the Nikkei 225 slid as much as 4% to its lowest point since May 22, while the broader TOPIX index declined roughly 3%.
Investor alarm grew after reports that NVIDIA Corporation's latest AI-related financing commitments exceeded $750 billion, stoking concerns about rising leverage and whether demand for AI infrastructure will match the scale of unprecedented investment. The fallout hit major memory and equipment names hard: South Korean memory maker SK Hynix Inc tumbled as much as 13% and Samsung Electronics Co Ltd fell as much as 10%.
Japan's semiconductor equipment and component makers also suffered steep losses. Kioxia Holdings Corp plunged as much as 18%, while Tokyo Electron Ltd., Disco Corp, Nikon Corp and Murata Mfg Co each dropped more than 9%.
Sentiment toward semiconductor equipment makers deteriorated further after a report that a Chinese state-backed company had begun mass-producing immersion deep ultraviolet (DUV) lithography machines. That development raised fresh concerns about intensifying competition for Japanese equipment suppliers and for European leader ASML Holding NV.
Regional performance and other markets
Elsewhere in Asia, Australia's S&P/ASX 200 slipped about 0.3% and Singapore's Straits Times Index fell roughly 0.5%. India's Nifty 50 Futures was little changed. Oil prices extended Monday's sharp decline following comments by President Donald Trump that there was a "good chance" of reaching a deal with Iran, accompanied by a pause in daily strikes and ongoing diplomatic efforts. The retreat in crude helped ease inflation concerns ahead of this week's Federal Reserve meeting, but it did not offset the technology-led selloff across Asian equities.
China and Hong Kong show relative resilience
In contrast to the rout in chip-focused markets, Chinese and Hong Kong technology shares held up better. Hong Kong's Hang Seng rose about 0.3%, while mainland indexes weakened: the Shanghai Composite fell roughly 0.6% and the Shanghai Shenzhen CSI 300 declined about 1.2%.
Optimism surrounding Beijing's drive for semiconductor self-sufficiency supported domestic tech names after CXMT Corp's strong Shanghai debut on Monday. Reports that Chinese firms have developed domestic immersion DUV lithography capabilities also bolstered market confidence that local manufacturers could narrow gaps with overseas rivals.
"The global DRAM market has long been dominated by Samsung, SK Hynix and Micron, with CXMT accounting for only about 10% of capacity. But fresh capital from its listing could allow it to capture a larger share of the market," Charlie Pullan, Global Markets Analyst at Finimize, said.
Individual movers in the region included JD.com, which rose nearly 3%, Meituan, which gained about 1.6%, and Alibaba Group Holding Ltd, which added around 1.4%.
Looking ahead
Market participants are now focused on a packed calendar of policy decisions and earnings that could shape near-term direction. Central bank meetings - including the Federal Reserve, Bank of Japan and Bank of England - are on the schedule this week, while quarterly results from major U.S. technology firms such as Microsoft, Meta Platforms, Apple and Amazon are also due and could influence risk sentiment.
Given the scale of the moves in semiconductor names and the added uncertainty from reports on lithography manufacturing, investors face a period of heightened volatility across technology and semiconductor-related sectors.