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Tech stocks in Asia and Europe extended their sell-off Monday, as investors soured on global AI-linked plays after the U.S. tech-heavy Nasdaq declined more than 4.5% last week.
Memory chip behemoths and heavyweights on South Korea’s Kospi Index, Samsung Electronics and SK Hynix, ended Monday’s trading session down 10.18% and 7.68%, respectively. The Kospi plunged as much as 8%, as the two companies make up over 40% of the index.
Taiwan Semiconductor Manufacturing Co, or TSMC, was down 2.96%, while Hon Hai Precision, also known as Foxconn, fell 5.27%.
Japanese tech investor Softbank Group plunged 6.1%, while Tokyo Electron and Advantest were down 7.45% and 5.72%, respectively.
European chip stocks followed Asian peers lower, with ASML, Infineon, STMicroelectronics, ASM International and Besi each falling between 3 and 4.5% in early trading.
The slump has been exacerbated by a risk-off sentiment amid expectations that interest rates in the U.S. could stay higher for longer, following last week’s U.S. labor data that sharply beat estimates.
“We are pushing the final two rate cuts in our Fed forecast back to June and December of 2027. The labor market has been stronger than we anticipated,” Goldman Sachs said in a note on Friday.
The share price declines follow a recent rally in Asia tech stocks that was supported by investor optimism on AI demand. Last month, Samsung Electronics and SK Hynix each crossed $1 trillion market valuation, while SoftBank recently became the most valuable company in Japan.
The sell-off in tech names was triggered after Broadcom‘s revenue for fiscal second quarter missed market estimates last week, plunging its shares and causing a cascading impact on the tech sector.
The VanEck Semiconductor ETF (SMH) lost over 9% Friday; Softbank’s British chip firm Arm Holdings had dropped nearly 13%, while Micron Technology declined more than 13%.
“The tech-led rout erased approximately $1.8 trillion in S&P 500 market cap,” according to a UOB note on Monday.
UOB, however, said that tech and software companies will remain in focus with “the debut of a space exploration/AI/tech company on the Nasdaq on Fri (12 Jun), in what may be the largest IPO ever.”
Broader Asia markets were also lower Monday, after a fresh escalation in the Iran war signals that the conflict is far from over.
CNBC’s Mike Sheen contributed to this report.
