Asian Tech Stocks Plunge

Asian technology equities suffered a sharp decline on Friday, mirroring a steep drop in U.S. markets overnight. The Nasdaq Composite fell 5.5%, pushing the index into correction territory after closing more than 10% below its recent peak. This move followed renewed investor anxiety regarding the sustainability of artificial intelligence spending and returns on data center infrastructure.

In South Korea, major chipmakers led the sell-off. SK Hynix shares dropped by more than 8%, while Samsung Electronics lost 7% of their value. The decline extended to other components of the country's tech sector, with LG Innotek falling 10% and LG Display dropping 7.7%.

Japanese markets experienced similar pressure on semiconductor-related firms. Advantest, a maker of chip-testing equipment, plunged 12.2%, and Tokyo Electron slid 7.3%. SoftBank Group, a major investor in technology, saw its shares tumble 11.6%. Memory chipmaker Kioxia Holdings fell nearly 10%, while Renesas Electronics declined 7.5%.

Taiwan’s semiconductor sector also faced heavy selling. TSMC, the largest contract chipmaker, slid 9.6%. Electronics manufacturers Hon Hai Precision Industry, known as Foxconn, and Foxconn Technology dropped 9.4% and 9.1%, respectively. The Philadelphia Semiconductor Index, which tracks U.S. chip makers, plunged 12.2% on the previous session.

The regional rout coincides with political developments in the United States. Democrats secured a sweeping victory in the recent midterm elections, leading some investors to worry about tighter restrictions on data center development. Such regulations could slow the pace of AI chip demand and related infrastructure construction.

Timothy Moe, chief Asia Pacific equity strategist at Goldman Sachs, noted that the Asian sell-off has been worsened by position unwinding, stop-loss selling, and heightened volatility. He told CNBC's "Squawk Box Asia" that political opposition to U.S. data center construction could directly impact the profits of Asian AI hardware suppliers.

Moe explained that if the speed and magnitude of U.S. buildout come into question, the market tends to react immediately. He stated that the current environment reflects a tendency to shoot first and ask questions later, as investors reassess the fundamentals of the AI boom.