A sharp sell-off in U.S. technology stocks spread to Asian exchanges on the morning of October 15. After trading opened, South Korea’s KOSPI fell more than 7%, Japan’s Nikkei more than 4%, and Taiwan’s Taiex 3%, Nikkei Asia reports.
Shares of South Korea’s SK Hynix, Nvidia’s main memory chip supplier, plunged more than 11%, while Japan’s Kioxia fell 11.4% and equipment supplier Tokyo Electron dropped 7.2%. The panic in Asia also spread beyond the tech sector, Nikkei notes: shares in Hyundai Motor, South Korea’s largest automaker, lost more than 6%.
On October 14, Wall Street had its worst day since July: the tech-heavy Nasdaq fell 1.9%, while the S&P 500, a “mirror” of the U.S. economy, dropped 1.1%. The PHLX Semiconductor Index lost 4.3%.
Inflation triggered the sell-off
Data on U.S. inflation prompted the sell-off in stocks. The core consumer price index, which excludes food and energy, rose 0.3% in September from the previous month, versus expectations of 0.2%. This bolstered expectations that the Fed would raise interest rates as soon as October, The Wall Street Journal writes. In September, the regulator raised rates for the first time in three years, but investors had expected a pause after that, the publication notes.
Rising borrowing costs threaten to constrain investment in AI infrastructure and increase credit risks, Nikkei explains. The shares that fell the most were those of companies that had borrowed heavily to build data centers and plan to continue taking out loans, WSJ notes.
Shares of CoreWeave, which provides cloud computing capacity for AI, fell more than 15%, while the yield on its bonds maturing in 2032 jumped to 15%, Nikkei reports. The fall in CoreWeave bond prices reflects investors’ concerns about the company’s credit quality, WSJ notes. “While the initial sell-off was triggered by consumer prices rising more than expected, the technology sector was the main driver of today’s decline,” JPMorgan analysts wrote about trading on October 14 (quoted by Reuters).
Next up: TSMC
Samsung’s operating profit, at the world’s largest memory chipmaker, rose nearly ninefold year over year in the third quarter, but its shares fell 10% on the morning of October 15, Nikkei writes. ASML, a key supplier of equipment used to produce AI chips, said it would not be able to fully meet demand in 2027–2028, and that customers were already making inquiries about orders for 2029–2030. But even this could not prevent a sell-off in the sector.
Investors are now awaiting results from the world’s largest contract chipmaker, TSMC. As Nikkei notes, the key question of earnings season is whether strong results can allay market concerns. TSMC shares themselves fell 2% on the morning of October 15.
The consensus forecast, based on estimates from 16 analysts, projects that TSMC’s third-quarter net profit will rise 65% to 746.3 billion Taiwan dollars ($23.4 billion), according to LSEG data cited by Reuters. If expectations are met, the company will set a quarterly profit record for the sixth consecutive time. ㅤ