Chip Stocks Tumble Across Asia as Rate Fears and AI Funding Worries Collide

A sell-off in chip stocks that started on Wall Street turned into a rout across Asia on Thursday, October 15. South Korea's Kospi fell more than 8 percent and tripped a market-wide trading halt, Samsung Electronics and SK hynix each lost more than 10 percent, and chip names from Tokyo to Taipei went down with them. Two worries are driving it: a hotter-than-expected US inflation report that put another Federal Reserve rate hike back on the table, and growing doubt about how the enormous AI buildout is being paid for (CNBC, The Korea Times).

Seoul takes the hardest hit

The Kospi was down 8.13 percent at 5,515.76 as of 1:17 p.m. Seoul time (12:17 p.m. Manila), after opening 5.59 percent lower. The Korea Exchange halted all trading for 20 minutes from 12:38 p.m. Seoul time, and the tech-heavy Kosdaq hit its own circuit breaker at 12:23 p.m. It was the first time since July 29 that both markets halted on the same day (The Korea Herald), and the ninth circuit breaker on the Kospi this year (The Korea Times).

Chipmakers took the brunt of it. As of that 1:17 p.m. reading, SK hynix was down 11.35 percent at 1.26 million won and Samsung Electronics was down 10.13 percent at 208,500 won. The drop pushed SK hynix's market value below 1,000 trillion won, to 929.18 trillion won. Samsung Electro-Mechanics fell 16.81 percent and SK Square lost 10.45 percent (The Korea Herald).

Tokyo, Taipei and Singapore follow

Japan's Nikkei 225 fell 4.8 percent to 64,489.06, with SoftBank Group down 9.4 percent, Tokyo Electron down 7.3 percent and memory maker Kioxia down 11.2 percent (Euronews). By midday Singapore time, Advantest had dropped more than 13 percent (CNA).

Taiwan held up a little better. As of 11:14 a.m. local time, the Taiex was down 1,612.82 points, or 3.32 percent, at 47,013.01. TSMC, which makes up more than 40 percent of the market's value, was down 2.01 percent at NT$2,440, while memory maker Nanya Technology fell 9.16 percent and MediaTek fell 5.92 percent (Focus Taiwan). TSMC reports earnings later on Thursday, and traders are watching it as the next big test for the sector (CNBC TV18). In Singapore, the Straits Times Index fell 0.9 percent, and chip-testing equipment maker AEM Holdings lost 9 percent (CNA).

It started with inflation on Wall Street

On Wednesday, October 14, US consumer prices for September came in hotter than expected, and the Nasdaq Composite fell 1.88 percent to 26,692.87 while the S&P 500 lost 1.11 percent to 7,718.94 (CNBC). The PHLX Semiconductor Index (SOX) dropped 4.3 percent, its sixth straight decline and its longest losing streak since May 2025 (Reuters via Investing.com, The Wall Street Journal). Over that six-day run, the index has erased $1.6 trillion in market value (CNBC TV18). Nvidia fell 3.2 percent, Broadcom 3.1 percent and AMD 5.7 percent (Euronews). Strong results from Samsung and ASML have not been enough to calm investors, and ASML's shares slipped even after it raised its outlook (CNBC TV18).

The AI money question

The sharpest moves came in companies that borrow heavily to build AI capacity. CoreWeave shares fell about 16 percent on Wednesday, and the yield on its 9.625 percent bond due 2032 rose to 14.8 percent, a level that signals real stress among lenders (CNBC). Oracle lost 8.8 percent and Nebius 10 percent (Reuters via Investing.com). Reuters' Trading Day column put it bluntly: investor sentiment toward AI financing "is souring. Rapidly" (Reuters via Investing.com).

Industry leaders have been raising the same concern. On Monday, the CEOs of Broadcom and Intel warned that financing could become a major headwind for the AI boom, with Broadcom's Hock Tan saying it could be a bigger challenge than shortages of chips or electricity. Memory makers face an extra worry about oversupply as early as 2029, after China's CXMT announced a memory density breakthrough over the weekend (CNBC).

Not everyone sees the end of the AI trade. Dan Ives of Yorkville Ives called the pullback a buying opportunity. "Higher yields raise the cost of financing these builds, and investors are right to focus on balance sheets and contract structure, but rates are a financing question, not a demand question," he wrote. He said his view would change only on a demand signal, such as hyperscalers cutting their spending plans, canceled contracts or falling GPU rental prices (CNBC).

Closer to home

The Philippine market has no big chip stocks of its own, but it has had a rough week. The PSEi fell 1.48 percent to close at 5,617.23 on Wednesday, its second straight loss, weighed down by a 6.59 percent drop in ICTSI and an IMF warning that the Philippines could post one of Southeast Asia's slowest growth rates this year (The Philippine Star). On Thursday morning, the peso weakened past ₱63 to the dollar for the first time, hitting a record low of ₱63.15 in early trading, which Philstar tied to renewed tensions in the Middle East (Philstar.com).

Whether this turns into something longer will likely depend on two things this week: what TSMC says about AI demand and spending, and whether US bond yields keep climbing. We'll keep an eye on both.