Asian stock markets experienced significant declines on Tuesday, with Seoul, Tokyo, and Taipei leading the way as technology companies stumbled under fresh concerns regarding the sustainability of the AI investment boom. This downturn occurs as investors anticipate an important earnings season and the release of key economic data from the United States.
The South Korean Kospi index plummeted by more than six percent, largely influenced by losses in major chip manufacturers SK Hynix and Samsung. Reports indicating that China’s CXMT was advancing in technology aimed at enhancing memory density further exacerbated the pressure on these companies.
According to reports, CXMT is expected to launch a new server-memory product based on its technology by the end of the year. Chris Weston from Pepperstone noted that China is effectively reducing the competitive edge held by U.S. companies in sectors such as AI and memory technology, suggesting that the ability to develop competitive products at lower costs reshapes prevailing market assumptions.
Japanese stocks also saw sharp declines, with the Nikkei 225 losing nearly three percent. Chipmaker Kioxia’s shares dropped more than 12 percent, while Tokyo Electron and Advantest fell by over six percent. The TSMC’s 1.8 percent decline contributed to a more than two percent decrease in Taipei’s market. Other Asian markets, including Hong Kong, Shanghai, Sydney, Wellington, and Manila, also recorded significant losses.
The global technology sector has been slowly recovering from a previous downturn but remains under scrutiny following hefty sell-offs in New York. Companies like SanDisk and Micron Technology saw losses of 6 percent and 3.9 percent, respectively. Concerns were heightened by comments from Broadcom CEO Hock Tan, who compared the current investor enthusiasm for AI to gambling. He warned that many investors might not fully understand their investments and are setting unrealistic expectations.
Tan pointed out that the industry still lacks a sustainable business model, referencing OpenAI’s substantial losses despite reporting annualized revenue of $50 billion in September. He indicated that high spending on training remains a significant financial strain.
The tensions in the Middle East, exacerbated by recent Houthi attacks on Saudi Arabia, slowed a decline in oil prices, which nevertheless saw both main crude contracts drop by over one percent. Despite these geopolitical concerns, Brent crude remains priced above $100, which continues to put upward pressure on global inflation.
Key stock market figures around 02:30 GMT showed the Kospi at 5,979.19 (down 6.3 percent), Wilkes 225 at 67,292.39 (down 2.5 percent), and the Hang Seng Index at 24,046.21 (down 0.9 percent).
