Asia's technology-heavy stock markets extended a global sell-off on Friday, with South Korea's KOSPI falling more than 8% at one point, Japan's Nikkei 225 dropping 7% and Taiwan's benchmark index declining more than 8%. The losses followed a rout in US technology shares, which erased more than $1 trillion from the combined market value of the Magnificent Seven on Thursday. Semiconductor stocks led declines across the region as investors reassessed the outlook for artificial intelligence spending.
The latest declines have deepened a broader correction across Asian equities. Four major markets are now in bear-market territory, with South Korea's benchmark down about 45% from its June record, China's Shenzhen market 30% below its June high, Taiwan's market 24% below its October peak and Japan's Nikkei 21% below its June record. A bear market is generally defined as a decline of at least 20% from a recent peak.
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The sell-off reflects concerns about the returns on massive investments in artificial intelligence infrastructure, the concentration of market gains in a small group of technology companies and the possibility of tighter US regulation following the midterm elections. Texas has emerged as a particular concern because of its importance to planned data-centre capacity.
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Nasdaq Rout
US technology stocks suffered their steepest single-session decline since April 2025 on Thursday, sending shock waves through global markets. The Nasdaq Composite fell 5.5%, its biggest daily decline in 19 months. The S&P 500 dropped 4.4%, while the Dow Jones Industrial Average lost 3.4%, or more than 1,800 points.
The Nasdaq-100 declined 6.4%, erasing about $2.3 trillion in market value, according to the figures cited in the market report. The Philadelphia Semiconductor Index plunged 12.2%, one of its steepest single-day declines on record.
Nvidia fell 9.3%, while Advanced Micro Devices dropped 17.3%. Other semiconductor and artificial intelligence infrastructure stocks also came under pressure.
The Magnificent Seven - Nvidia, Apple, Microsoft, Alphabet, Amazon, Meta Platforms and Tesla - lost more than $1 trillion in combined market value during the session. Nvidia accounted for more than $440 billion of the decline.
The sell-off has raised questions about whether the returns from artificial intelligence investment will justify the scale of spending by technology companies. Major players have committed hundreds of billions of dollars to data centres, advanced processors and computing infrastructure. Investors are increasingly scrutinising the pace of that spending and the revenue it is expected to generate.
The unwinding of crowded positions in high-valuation technology stocks added to the pressure. Leveraged positions and forced selling may also have amplified the declines.
Asia's Bear Markets
The pressure spread to Asian markets on Friday as investors reassessed the outlook for semiconductor demand and technology investment.
South Korea's KOSPI fell more than 8%, touching a nine-month low of 4,911.28 and triggering a 20-minute trading halt. It later recovered some losses and was down 3.9%.
Japan's Nikkei 225 dropped 7% after the opening bell, while Taiwan's benchmark index fell more than 8%.
Semiconductor stocks led the latest declines. SK Hynix fell as much as 13% and Samsung Electronics dropped more than 10% in South Korea. Japan's Kioxia plunged 14%, while SoftBank Group lost 11%. Taiwan Semiconductor Manufacturing Co. fell as much as 8.5%.
The declines highlight the exposure of Asian technology companies to the global artificial intelligence investment cycle. South Korea and Taiwan are major suppliers of semiconductors used in AI infrastructure, while Japanese companies are also exposed to demand for memory chips and related technology.
A slowdown in data-centre construction or a reduction in spending by large technology companies could affect orders for advanced chips, memory products and semiconductor equipment. That prospect has put pressure on earnings expectations across the region's technology sector.
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Texas Risk
The US midterm election results have added another source of uncertainty for technology companies and investors.
Democratic gains have raised concerns about tighter oversight of artificial intelligence, data-centre construction and the infrastructure required to support the industry. The potential for new rules governing electricity consumption and water use has become particularly important for companies planning large computing facilities.
Texas is a key focus because of its role in the expansion of US data-centre capacity, as the state accounts for about 25% of planned US data-centre capacity, according to Goldman Sachs estimates cited by CoinDesk. A pause in approvals or additional regulatory requirements could delay projects and affect investment plans.
Democrat Gina Hinojosa defeated Republican Governor Greg Abbott in a surprise victory. Hinojosa has pledged to halt new data-centre approvals until the state introduces rules to protect residents from higher electricity and water costs.
The implications extend to cryptocurrency mining companies that have been converting existing power infrastructure and industrial sites into AI data-centre facilities. Delays in approvals could affect their expansion plans and their ability to secure long-term contracts with technology companies.
The regulatory concerns extend beyond artificial intelligence models. Data centres consume large amounts of electricity and water, placing pressure on local infrastructure and utility costs. Additional consumer protections and testing requirements could raise compliance costs and extend project timelines.
For Asian semiconductor manufacturers, the consequences could extend beyond a short-term decline in share prices. Their growth expectations are closely tied to demand from US hyperscalers and AI infrastructure developers. Any moderation in data-centre spending could affect demand for advanced processors, memory products and related equipment.
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