(Sharecast News) - Asia-Pacific semiconductor stocks tumbled on Thursday as a sell-off in US chipmakers spilled into the region, with SK Hynix reversing the previous session's rally and continuing to experience sharp volatility since its US listing last week.
"The AI trade just got a valuation hangover," said Patrick Munnelly, market strategy partner at TickMill.
"Asia's semiconductor complex rolled over hard as investors stopped asking whether AI demand is real and started asking whether it is already overpaid for."
The losses followed a decline in US semiconductor shares overnight, with Micron Technology falling 8%, Intel dropping more than 4%, and Lam Research and Advanced Micro Devices each losing around 3%.
Oil prices rose earlier in the Asian session as renewed US-Iran tensions increased concerns over a prolonged Middle East conflict, although gains were capped by signs that diplomacy remained possible.
President Donald Trump said Wednesday that Iran wanted to meet and reach a deal, saying: "They're nasty people, but they want to make a deal."
The US military also carried out fresh strikes on Iran, with US Central Command saying the attacks targeted Iranian military capabilities used to threaten vessels transiting through the Strait of Hormuz.
Brent crude futures were last down 0.73% on ICE at $84.33 per barrel, while the NYMEX quote for West Texas Intermediate slipped 0.36% to $79.31.
Munnelly said oil was no longer accelerating, providing some relief for markets despite renewed geopolitical tensions.
"Despite another round of US airstrikes on Iran and the resumption of the Strait of Hormuz blockade, Brent is hovering around $85 per barrel for a third consecutive morning," he said.
"That tells us the market is carrying a geopolitical premium, but not yet pricing a fresh supply rupture," Munnelly added.
"A stable Brent price around $85 is still inflationary versus early July levels, but it is less destabilising than a disorderly move toward $90-$100."
Most markets in the red as chip-related stocks tumble
Japan's Nikkei 225 fell 2.79% to 66,835.54, while the broader Topix declined 1.45% to 4,028.79.
Kioxia Holdings plunged 15.03%, Ibiden dropped 10.01%, and Sumco Corporation fell 9.07%.
In China, the Shanghai Composite declined 1.85% to 3,882.41, while the Shenzhen Component fell 1.97% to 14,488.65.
Montage Technology dropped 16.44%, Geo-Jade Petroleum lost 10.07%, and Daheng New Epoch Technology declined 10.03%.
Hong Kong bucked the regional trend, with the Hang Seng Index rising 1.33% to 25,008.60.
Pop Mart International Group gained 6.87%, Xiaomi rose 6.34%, and Geely Automobile added 5.38%.
South Korea's Kospi 100 plunged 7.29% to 8,456.83.
SK Square fell 12.3%, SK Hynix 11.53% and Hanwha Solutions declined 10.39%.
SK Hynix shares reversed the previous session's 8% rally.
The stock had already recorded its steepest one-day decline on Monday as investors took profits amid growing concerns over AI spending.
Domestic rival Samsung Electronics fell more than 8%, while Seoul Semiconductor declined 5.13%, LG Innotek lost 2.91%, and Samsung SDI fell more than 4%.
Munnelly said South Korea had again become the focal point for the broader AI valuation reset.
"Korea is again the market's lightning rod," he said.
"The Kospi's slide has erased yesterday's CPI relief rally and left the region with a familiar problem - crude is no longer screaming higher, but chips are suddenly doing enough damage on their own."
The Bank of Korea raised its benchmark interest rate by 25 basis points to 2.75% on Thursday, marking its first rate hike since January 2023.
The move was in line with economist expectations and came as inflationary pressures increased, with headline consumer inflation rising to 3.2% in June, the highest since 2023.
The central bank warned that large performance bonuses paid by major technology companies could feed into broader wage growth and add to inflation pressures.
Australia's S&P/ASX 200 was broadly flat, slipping 0.005% to 8,840.70.
Capstone Copper fell 4.06%, PLS Group declined 3.66%, and Mineral Resources lost 3.35%.
Across the Tasman Sea, New Zealand's S&P/NZX 50 fell 0.15% to 13,614.78.
Serko dropped 2.88%, Summerset Group declined 2.57%, and Sky Network Television fell 1.8%.
Dollar mixed against regional peers
In currencies, the dollar was last down 0.02% on the yen to trade at JPY 162.15, as it gained 0.08% against the Aussie to AUD 1.4288, and fell 0.02% on the Kiwi to change hands at NZD 1.7091.
Munnelly said the Federal Reserve's Beige Book had done little to clarify the policy outlook, with the economy still expanding but without strong momentum.
"Eleven of twelve districts reported growth, but only at a slight or modest pace," he said.
"That is consistent with an economy still expanding, but not with much force."
He said the Fed remained caught between softer inflation data and renewed energy risks.
"This week's softer CPI took some tightening out of the curve, but oil uncertainty and still-positive activity prevent a full relief rally," Munnelly said.
Reporting by Josh White for Sharecast.com.
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