The selloff in chip stocks on Wall Street continued on stock exchanges in Japan and South Korea on Friday. The Japanese Nikkei 225 index temporarily fell by 6.7 percent and was therefore at the April level. South Korea's leading index Kospi, which is dominated by the world's leading memory chip manufacturers Samsung Electronics and SK Hynix, even fell by more than eight percent at the start of trading.
Over the course of the morning, the stock markets made up for some of the losses.
At the lunch break, the Nikkei 225 was 57,585 points, 5.3 percent below the previous day's close.
By then, the broader Topix had lost 5.4 percent to 3,726 points.
South Korea's Kospi fell 4.5 percent to 5,139 points.
In Taiwan, home of the world's largest chip contract manufacturer TSMC, the leading index Taiex fell by 3.6 percent by 10:48 a.m.
Even otherwise more robust markets in the region were dragged down. The Straits Times index in Singapore fell 2.1 percent.
Hong Kong's Hang Seng Index fell 0.5 percent and the Shanghai Composite fell one percent.
Panic on Wall Street exacerbates selloff
The downward trend began on Thursday afternoon in Asia and then gained momentum on Wall Street. The Dow Jones fell by 3.4 percent on Thursday, the technology-heavy Nasdaq by 5.5 percent and the Philadelphia semiconductor index by as much as 12.2 percent. The sell-off on Wall Street followed the Democrats' clear victory in the US midterm elections. The party won a majority in both houses of Congress.
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Naka Matsuzawa from the Japanese investment bank Nomura gives two reasons: “Concerns about stricter regulations in the field of artificial intelligence and excessive competition from China continue.” Many Democrats support local initiatives that want to regulate the construction of AI data centers more strictly.
There are also growing doubts about how AI companies and data center operators want to recoup their billions in investments. For US President Donald Trump, the culprit is still clear: he used the renewed price drop to shift responsibility to the Democrats as the election winners.
“It’s so sad to see this!” wrote the president on his Truth Social platform on Thursday evening (local time). “We put in so much work to get to a level that no one has ever seen before, and then this.”
He then took direct aim at the retirement savings of many Americans, the 401(k) company pension plans, which are mostly invested in stocks: "That's why your 401(k) pension plans have fallen in value. It wasn't the Republicans, it was the 'Dumocrats'." With this neologism, an allusion to the English word “dumb,” Trump regularly denigrates the Democrats.
Chip stocks well below their record highs
However, the price collapse had begun long before the elections. The doubts about the boom in AI data centers and the exorbitant valuations of the companies that benefit from them had become too great. It is unclear how long the decline will last - especially for the East Asian suppliers of the AI boom.
Several Asian chipmakers continue to post record profits, but their stock prices are well below their highs. At lunchtime, Kioxia shares were 77 percent below their record high. At SK Hynix the gap was 61 percent, at Samsung Electronics 47 percent and at TSMC 18 percent.
Softbank is hit twice
Outside the semiconductor sector, the situation is more stable. Japanese companies in particular, which presented strong half-year figures this week, were punished far less. The AI investor Softbank, one of the largest shareholders in the US AI developer OpenAI, was hit twice.
At the same time it became known that China's authority for the security review of foreign investments has so far rejected the takeover of ABB Robotics by the Japanese group. In October 2025, Softbank announced that it would buy the Swiss industrial group's robot division for $5.4 billion.
Kazuo Hiyane from the Mitsubishi Research Institute sees this as “a serious blow to the future strategy in the field of physical AI”, i.e. for AI-controlled robots and machines. This means that Softbank is in danger of losing access to an important raw material for robots and AI in production: data from Chinese factories. ABB Robotics currently employs around 12,700 people in China.
Softbank and ABB are in close dialogue, the companies announced on Thursday: “Both parties are working constructively on the transaction.” All decisions on reportable matters will be announced immediately.
Bond yields are falling
Toshiyuki Oyama, senior market analyst at Matsui Securities, sees a positive side effect of the crisis of trust surrounding AI: “The only good news is that the inflation risk that previously dominated the headlines has suddenly subsided.”
The yield on ten-year government bonds in the USA fell from 5.305 to 4.83 percent within around a month, and in Japan from 3.105 to 2.675 percent. For Japan, this is the lowest level since the end of June.
The yen rose slightly. The dollar fell by 0.2 percent to just under 158 yen, the euro by 0.5 percent to 176.92 yen.
