AI Chip Demand Falters: Seoul Market Crashes 8%, Global Tech Stocks Tumble
Asian stock markets plunged on Monday, led by an 8% crash in South Korea, after a key supplier for the artificial intelligence boom missed its revenue target, sparking fears that demand for AI hardware is cooling.
The selloff began after Broadcom, a US company that makes chips and networking gear for AI systems, reported earnings slightly below expectations [169002]. Though the miss was small, the market reaction was severe. South Korea’s benchmark Kospi index dropped 8.1%, its biggest single-day loss since 2008 [167998]. Samsung Electronics lost between 6.5% and 10%, while chipmaker SK Hynix fell nearly 8% [169002][167998].
The crash spread across Asia. Japan’s Nikkei lost 3.4%, Hong Kong’s Hang Seng dropped 2.1%, and Taiwan’s market also took a hit [167998][169002]. Japanese semiconductor stocks came under pressure as well [169002].
The broad decline suggests investors are concerned that demand for AI hardware may be cooling [169002]. The selloff was further fueled by a stronger-than-expected US jobs report, which raised fears the Federal Reserve will keep interest rates higher for longer, making borrowing more expensive for companies worldwide [167998]. The Dow Jones had already fallen more than 1,000 points on Wall Street last week [167998].
The crash hit technology and export-heavy stocks hardest, and the sharp ups and downs in South Korea are increasing worries about leveraged investing, where people borrow money to buy stocks [168007]. When prices fall quickly, investors who borrowed money may be forced to sell, which can make the market drop even more [168007].