Asian tech stocks continued their sell-off on Monday as investors disappointed with global stocks linked to artificial intelligence, with the US tech giant Nasdaq falling more than 4.5% last week.
Memory chip giants and heavyweights on South Korea’s Kospi index, Samsung Electronics and SK Hynix, fell 5% and 2%, respectively. Kospi fell by as much as 8% because those two companies make up over 40% of the index.
Taiwan Semiconductor Manufacturing Co , or TSMC, fell 2.1%, while Hon Hai Precision, also known as Foxconn, fell 5.1%.
Japanese technology investor Softbank Group fell 7.5%, while Tokyo Electron and Advantest fell 6.7% and 5%, respectively.
The drop in share prices follows a recent rally in Asian technology stocks, which has been supported by investor optimism about demand for artificial intelligence. Last month, Samsung Electronics and SK Hynix crossed the $1 trillion market cap, while SoftBank recently became Japan’s most valuable company, SEEBiz reports.
The sell-off in tech names was fueled after Broadcom’s fiscal second-quarter earnings beat market estimates last week, sending shares tumbling and a cascading effect on the tech sector.
The VanEck Semiconductor ETF (SMH) lost more than 9% on Friday; Softbank’s British chip company Arm Holdings fell almost 13%, while Micron Technology fell more than 13%.
“The tech meltdown wiped out roughly $1.8 trillion in S&P 500 market capitalization,” according to a June 8 UOB note.
UOB, however, said technology and software firms would remain the focus with “the space exploration/artificial intelligence/technology firm’s debut on Nasdaq on Friday (June 12), in what could be the largest initial public offering ever.”
Broader Asian stocks were also lower on Monday, as a new escalation in the war in Iran signals that the conflict is nowhere near over.
