Images of mobile devices at the Innovation Museum of Taiwan Semiconductor Manufacturing Co. (TSMC) in Hsinchu, Tuesday, January 11, 2022.
I-Hwa Cheng | Bloomberg | Getty Images
Asian technology stocks fell on Friday, following a sharp sell-off on Wall Street overnight that sent the tech-heavy Nasdaq Composite into correction territory as fresh concerns over artificial intelligence spending shook investor confidence.
South Korean chipmaker SK Hynix plunged more than 8%, while Samsung Electronics lost 7%. LG Innotek and LG Display fell 10% and 7.7%, respectively, as selling pressure spread across the country’s technology sector.
The rout came as investors feared that Democrats’ landslide victory in the U.S. midterm elections could lead to tighter restrictions on data center development, potentially slowing demand for AI chips and related infrastructure.
In Japan, semiconductor-related stocks also fell, the maker of chip testing equipment Avantest plunging by 12.2%, while Tokyo Electron slipped 7.3%. Tech investment giant SoftBank Group fell 11.6%.
Memory chip maker shares Kioxia Holdings fell by almost 10%, while Renesas Electronics decreased by 7.5%.
In Taiwan, semiconductor stocks also saw heavy selling pressure as contract chipmaker TSMC sliding 9.6%. Electronics manufacturers Hon Hai Precision Industryalso known as Foxconn, and Foxconn Technology fell 9.4% and 9.1%, respectively, as the regional technology rout deepened.
The declines follow a brutal session on Wall Street, where the Nasdaq Composite fell 5.5%, amid growing concerns about the sustainability of the AI investment boom and returns on massive spending on data centers. It closed more than 10% below its recent high. The Philadelphia Semiconductor index plunged 12.2%.
The sell-off in Asian stocks was exacerbated by investor unwinds, stop-loss selling and increased volatility, Timothy Moe, chief equity strategist for Asia-Pacific at Goldman Sachs, told CNBC’s “Squawk Box Asia” on Friday.
He added that possible political opposition to building data centers in the United States could affect demand and profits for Asian suppliers of AI hardware.
“If there are concerns about the speed and scale of construction in the United States, then obviously that’s going to call all of that into question,” he said. “The market trend is always to shoot first and ask questions later. I think that’s exactly what’s happening now.”
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