The selling didn't stop at the Pacific. A $1.6 trillion wipeout in US semiconductor stocks over six trading days spilled into Asia Thursday, dragging down the entire hardware complex. It doesn't matter that Samsung Electronics and ASML just posted strong earnings. The market isn't buying it.
Samsung and SK Hynix both slid more than 6%, sending the South Korean Kospi down as much as 6.5% at the open. Japan’s Nikkei 225 followed, dropping over 3%, with Ibiden and Kioxia among the worst performers. The Kospi is now on track for its seventh straight losing day, its longest streak since September 2024, and is trading near its lowest levels since late July.
Why the panic? Two things collided: sticky inflation and AI bill shock. US consumer prices rose in September at the fastest pace in five months, fueling bets that the Federal Reserve will keep rates higher for longer. Then came the red flag: CoreWeave Inc. bonds dropped to distress levels, making investors question if the massive capital expenditure on AI infrastructure is actually sustainable.
"Investor sentiment is weak, and fatigue has been building," said Jo Hyunik, investment division manager at Seoul-based Iroom Investment Advisors. He expects this volatile, flow-driven market to stick around until there's clarity on US rates and midterm elections. Kang DaeKwun, CEO of Life Asset Management, called the current valuation in South Korea an "extreme level," suggesting a pullback might be an entry point only if tech funding issues resolve.
All eyes turn to Taiwan Semiconductor Manufacturing Co. (TSMC), which reports earnings later Thursday. TSMC has held up better than its Korean peers recently, as the memory cycle concerns hit Samsung and SK Hynix harder. For now, the market is in overdrive, punishing hardware stocks regardless of fundamental performance.