Asian equity markets opened under heavy selling pressure on Tuesday, with semiconductor and technology shares suffering some of the deepest losses as investors grappled with concerns about Chinese competition in chipmaking, doubts surrounding financing for AI initiatives and the prospect of U.S. interest rate action.
South Korea’s KOSPI plunged close to 10% to a three-month trough, activating a circuit breaker and sending the index toward its largest monthly decline since the 1997 Asian financial crisis. The index had more than tripled over the 12 months to June but has surrendered over a third of that peak since then.
Major Korean memory and electronics names were hit especially hard. SK Hynix (KRX:000660) and Samsung Electronics (KRX:005930) each slid by more than 12% as the prior rally reversed in a market where leverage played a material role.
In Japan, the Nikkei 225 fell about 4%, marking a two-year low, following a 2.2% decline in the Philadelphia Semiconductor index on Monday. Several Tokyo-listed technology firms featured among the biggest decliners: Kioxia was down sharply, falling around 18%, and Tokyo Electron dropped about 11%.
Traders also reacted to reports of shifts in the global chip-supply chain. A report on Monday said China had begun producing domestically developed immersion deep ultraviolet lithography machines - a tool segment long dominated by ASML (NASDAQ:ASML) - and ASML shares dropped 8.5% after the story.
Chris Weston, head of research at broker Pepperstone in Melbourne, said there is no single factor moving the market but rather a combination of concerns about AI funding and China’s rise as a competitor along the supply chain.
China’s CXMT Corp (SHA:688825), identified in the report as the world’s fourth-largest memory maker, completed a large listing on Monday, raising $8.6 billion and finishing its debut session as China’s most valuable company. CXMT’s shares traded about 3-4% lower in Shanghai thereafter.
Kim Seok-hwan, a Seoul-based market analyst at Mirae Asset Securities, said "The market’s concern lies less in CXMT’s current earnings and more in its potential for accelerated capacity expansion to rival Korean companies."
Nvidia (NASDAQ:NVDA) also saw selling pressure, with shares down about 5% after reports that the company is in discussions to provide roughly $250 billion in financing guarantees for OpenAI as part of a data centre project. The report added to investor caution around the funding dynamics of the AI boom.
Oil prices eased on the session, and investors appeared increasingly attentive to commentary and data that could influence U.S. monetary policy, with concerns that rate hikes could be announced as soon as this week adding to the broader market pressure.
Overall, the session reflected concentrated selling across semiconductor and technology sectors, amplified by concerns about competition and funding for large-scale AI infrastructure, together with macroeconomic risk from potential near-term rate moves.