Revealed: The Reasons Investors Are Dumping Asian Tech Stocks

Asian technology stocks were hit by a massive sell-off on Wednesday (29/7/2026), with semiconductor manufacturers leading the decline. In South Korea, SK Hynix shares plunged more than 15% despite the chip giant reporting its highest quarterly profit ever, as the results still fell short of analyst expectations. Samsung Electronics tumbled over 8%, while LG Innotek and Seoul Semiconductor dropped 15% and 10%, respectively. The benchmark Kospi index triggered a circuit breaker for the second consecutive day, with a two-day decline exceeding 18%.

The sell-off spread to Wall Street, where Intel fell nearly 6% and AMD slumped 8%. Memory chip makers Micron and Seagate weakened more than 8%, Western Digital corrected nearly 7%, and Sandisk plunged 14%. In Japan, SoftBank Group, a major proxy for AI investment through its stake in Arm, also came under pressure.

Several factors are driving the rout. First, the debut of Chinese memory chip maker CXMT on the domestic exchange has sparked concern, with reports that Apple is eyeing its products, signalling a potential challenge to established players like SK Hynix and Samsung. Further unease stems from reports that China has begun producing ultra-advanced chip-making machines, threatening Western dominance in the critical supply chain.

Second, reports that Nvidia may provide around US$250 billion in guarantees to fund a massive OpenAI data centre project sent Nvidia shares down 5%. Investors worry about the risk of over-dependence between Nvidia and its customer base, raising questions about the sustainability of the AI investment boom.

Third, broader concerns persist over massive capital expenditure by US tech giants on AI infrastructure, with Microsoft, Meta, Apple, and Amazon set to report earnings this week. Kyle Rodda, senior financial market analyst at Capital.com, noted that these results represent a key test for the narrative that has underpinned the global tech rally, with investors fearing excessive spending could erode future returns.

Amid the turmoil, some analysts see a silver lining. Kieron Poon, director of Asia equities at Aberdeen Investments, views the correction as a reflection of ongoing deleveraging in South Korea and weakened sentiment, rather than deteriorating fundamentals, presenting an opportunity to buy quality stocks at more attractive valuations. David Riedel, founder of Riedel Research Group, suggested the sell-off in AI-related chip stocks reflects investors cashing in on earlier euphoria. Meanwhile, Owen Lamont of Acadian Asset Management pointed to deep uncertainty around the AI investment cycle as a key driver of volatility, adding that leveraged investment products may have amplified the swings.