Chip makers and tech investors such as Samsung and SoftBank plunge as global investors fret over potential interest inflation and impending interest rate hikes spooked traders already wary of the heavily indebted sector.
South Korea’s benchmark Kospi 200 index, which is heavily skewed towards companies that manufacture memory chips, fell more than 8% overnight to a six-month closing low, triggering circuit breakers that halted trading at various intervals.
Some of those semiconductor stocks, including SK Hynix and Samsung Electronics, plummeted nearly 11% and 9.5%, respectively. The index finished at a six-month low, down 8.1%.
Meanwhile, Japan’s Nikkei 225 dropped 4.9% on Thursday, following an 11% slump in memory chip maker Kioxia and a 10% decline in SoftBank, a major investor in ChatGPT owner OpenAI.
These losses followed a downturn on Wall Street during the previous session, where the Nasdaq Composite fell 1.9% and the S&P 500 dropped 1.1%, marking its worst performance since July.
The sell-off follows US data indicating that domestic inflation climbed to a higher-than-expected 3.7% in September, representing the fastest price increase since the consumer price index (CPI) rate reached a three-year peak of 4.2% in May.
This figure has unsettled investors who now anticipate further interest rate hikes by the US Federal Reserve, with some market participants pricing in another increase as early as the end of the month.
“Markets have just had an incredibly tumultuous 24 hours, as a strong US CPI print was then followed up with mounting fears around the AI trade,” Deutsche Bank analysts led by Jim Reid, said.
Worryingly, the data showed that this trend was not limited to fuel costs, which have been driven up by geopolitical tensions, including the ripple effects from the US war on Iran. Reid said: “This wasn’t just an energy surge driving prices higher, as there were broad-based moves across the consumer basket.”
The downturn follows warnings from the International Monetary Fund, which stated earlier this week that the threat of an AI share price crash spreading across global markets is jeopardizing world financial stability.
“The consequences of an AI correction could be global,” it warned. Aside from the US, Asian markets would be most exposed, with the UK and eurozone potentially more insulated—though investors holding US assets would still be affected.
The latest market jitters reached China, where Shanghai’s CSI 300 slipped as much as 2.4%, hitting its lowest level since August 2025. In Taiwan, TSMC—one of the world’s leading chip makers and Asia’s most valuable company—fell 2% despite reporting its sixth consecutive quarter of profits.
European stocks trended lower at the start of trading, with the Europe Stoxx 600 down 0.4%, the UK’s FTSE 100 down 0.06%, France’s CAC 40 down 0.19%, and Spain’s Ibex falling 0.17%. Germany’s DAX declined by 0.53%.
In the US, stock futures indicated further losses for tech shares, with Nasdaq 100 futures dropping 1%.
