Asian chip stocks slide as SK Hynix gives back prior-day rally

Asian semiconductor shares fell sharply on Thursday, led by a drop of more than 9% in SK Hynix in Seoul, as weakness in U.S. chip stocks carried into regional trading. The move erased SK Hynix’s 8% gain from the previous session and extended a period of elevated trading swings since its U.S. listing last week, according to CNBC.

The decline came after investors took profits earlier in the week amid rising concerns about the scale of artificial intelligence-related spending. CNBC reported that SK Hynix recorded its steepest one-day fall on Monday, before rebounding and then falling again on Thursday.

South Korean technology shares broadly weakened. Samsung Electronics dropped more than 7%, Seoul Semiconductor declined more than 5%, LG Innotek lost about 1%, and Samsung SDI was down more than 2%.

The pressure was not confined to Seoul. In Japan, shares tied to AI and chip production also sold off: Advantest fell more than 6%, SoftBank Group slid nearly 7%, Tokyo Electron lost more than 5%, and Renesas Electronics declined 4%, according to CNBC market data.

U.S. losses set the tone

The Asian retreat followed overnight selling in U.S. semiconductor names. Micron Technology fell 8%, Intel lost more than 4%, and Lam Research and Advanced Micro Devices each declined about 3%.

Chip shares in Asia often react to moves in U.S. peers because investors treat the sector as a global supply chain tied to the same end markets, including AI servers, memory, equipment and advanced manufacturing. When sentiment shifts on capital spending or valuations, selling can spread across companies with different business models but shared exposure to semiconductor demand.

The losses came even after ASML, the Dutch chip-equipment maker, reported strong results. CNBC said ASML raised its full-year sales outlook for a second time this year, guiding for revenue of 43 billion euros to 45 billion euros, ahead of analyst expectations. The company also set out plans to increase production of extreme ultraviolet lithography systems, which are used to manufacture advanced chips.

Concern over crowded positioning

Louis Kondratev, a trader at XFUNDs, told CNBC that the latest decline reflected how heavily investors had moved into semiconductor stocks after a long AI-led rally.

“Semiconductors alone now make up roughly 20% of the S&P 500, which is incredibly difficult to sustain,” Kondratev said. He added that chip stocks represented just over 8% of the index during the 2000 dot-com bubble and have historically averaged between 2% and 5%.

Kondratev said earnings momentum in the sector had remained strong, but warned that the pace of gains could become harder to maintain as investors reassess elevated valuations.

“Earnings momentum has been very strong, but it’s mostly concentrated in semiconductors, and that momentum may begin to slow as valuations find their place,” he said.

The sell-off underscored the sensitivity of Asian technology markets to U.S. semiconductor sentiment, particularly after a rally driven by expectations for AI investment. The latest moves showed investors reducing exposure across memory, equipment and AI-linked technology shares despite company-specific earnings strength in parts of the industry.

This story draws on original reporting from CNBC.