Worries that American spending on artificial intelligence could cool sent stock markets across East Asia sharply lower on Nov. 6, with the region's semiconductor-heavy benchmarks in South Korea, Japan and Taiwan dropping between 6% and 8% in early trading.
The selloff followed a brutal session for chip stocks on Wall Street and hit the companies that form the backbone of the global semiconductor supply chain, from contract manufacturers to memory makers and equipment suppliers, according to a report by Businesskorea.
Taiwan Leads the Decline as TSMC Slides
Taiwan's Weighted Index posted the steepest drop among major Asian markets, falling as much as 9% soon after the opening bell. TSMC, the world's largest contract chipmaker, lost as much as 10% intraday, its biggest one-day fall since April 2025.
Because TSMC represents more than 40% of Taiwan's total market capitalization, its moves heavily shape the benchmark. The index was heading for a seventh straight losing session, its longest run since June 2022, and had dropped more than 20% from its October peak, putting it in bear-market territory.
Even so, the index was still up more than 30% for the year, leaving it among the strongest major equity markets worldwide.
Circuit Breaker Halts Trading in Seoul
South Korea's KOSPI sank more than 8% shortly after trading began, tripping a Level 1 circuit breaker that paused the market for 20 minutes. The index slipped below the closely watched 5,000 mark during the session.
Samsung Electronics and SK hynix, two of the country's most valuable listed companies, each fell roughly 10%, accounting for much of the damage to the benchmark.
Japanese Equipment Makers Take a Hit
In Tokyo, the Nikkei 225 dropped more than 7% intraday and fell below 60,000. Chip equipment and testing firms Tokyo Electron and Advantest each lost more than 10%, leading the decline.
The pain was not spread evenly across Japanese sectors. A day earlier, on Nov. 5, Advantest fell 14.7% and Tokyo Electron 9.4%, while Toyota rose 16.7%.
Politics and Return Doubts Drive the Selloff
Part of the pressure stems from U.S. politics. After Democrats won majorities in both the Senate and the House in the Nov. 3 midterm elections, investors grew concerned that rules on building AI data centers could become stricter, with some politicians calling for limits on new development.
That has raised fears that large technology companies might postpone their AI infrastructure projects. At the same time, investors are questioning whether the vast sums being poured into AI will generate adequate returns.
Any slowdown in data center construction could reduce demand for processors, memory chips and the equipment used to make them, which explains why the selloff concentrated on semiconductor names.
Wall Street Losses Set the Tone
The turmoil began in the United States. The Philadelphia Semiconductor Index closed 12.2% lower at 9,011.14, its largest single-day fall since March 2020 and its lowest close in about seven months. It was down 38.4% from its June high and 21.8% over the prior five sessions.
AMD and Micron Technology each dropped about 17%, and Nvidia fell 9%. Citing figures from The Wall Street Journal, the report said Nasdaq-listed stocks lost roughly $2.5 trillion in combined market value in one day, while S&P 500 members shed about $2.9 trillion, both record one-day declines.
The Nasdaq Composite has now fallen more than 10% from last month's record high, placing it in correction territory. The MSCI Asia-Pacific Index also slid as much as 1.9% intraday, its seventh consecutive loss and longest losing streak since August 2023.
What the Turmoil Means for the Chip Industry
There were early signs of stabilization in the U.S., where Nasdaq futures turned positive and S&P 500 E-mini futures trimmed losses. Investors are now weighing whether this is a short-lived panic or the start of a broader rethink of AI growth expectations.
For hardware companies and the startups that depend on AI infrastructure spending, the episode highlights how closely the sector's fortunes are tied to the capital expenditure plans of a few large tech firms. Markets in South Korea and Taiwan, where chip stocks dominate the indices, are likely to stay volatile as U.S. regulatory debates and Big Tech investment decisions unfold.
Source: Businesskorea
