Global tech selloff deepens as Korea's chipmakers tumble and AI-spending doubts spread

A sharp selloff in technology shares swept across global markets on Tuesday, with the epicentre in Asia, as investors retreated from the artificial-intelligence trade that has driven equities to records this year and braced for the prospect of higher US interest rates.

The most violent moves came in South Korea, where the benchmark Kospi index plunged around 10%, triggering a market-wide circuit breaker that briefly suspended trading. The damage was concentrated in the country's semiconductor giants: SK Hynix and Samsung Electronics, two of the world's largest memory-chip makers and central players in the AI supply chain, each tumbled more than 12%. The immediate spark was a report that SK Hynix might slow the expansion of its high-bandwidth memory capacity and redirect resources toward conventional DRAM, a shift some investors read as a warning over AI-related demand, even as others argued it simply reflected attractive pricing in standard memory rather than weakness.

The selling rippled outward quickly. Japan's Nikkei 225 fell around 3.5% and the broader Topix dropped too, both snapping multi-session winning runs, while Hong Kong and mainland Chinese shares slid in the same risk-off mood. A regional gauge of Asian technology stocks fell close to 5%, ending an eight-day streak of gains. By the European open, the pan-regional Stoxx 600 was down more than 1%, with its technology subindex off a steeper 3% as chip-equipment makers and semiconductor names led the retreat.

In the United States, futures pointed to a weak start, with contracts tied to the tech-heavy Nasdaq 100 falling roughly 2% to nearly 3% and broader S&P 500 futures lower, though the more industrially weighted Dow held up better. The moves followed a losing session on Wall Street, where several mega-cap names had already retreated sharply.

Two forces are driving the unwind. The first is mounting unease over whether the enormous sums being poured into AI infrastructure, from data centres to advanced chips, will generate returns sufficient to justify the lofty valuations now attached to the companies involved. The second is monetary policy: the Federal Reserve's hawkish turn, with a sizeable bloc of officials now signalling rate increases this year, has lifted real yields and the dollar, a combination that weighs most heavily on the high-multiple growth stocks at the heart of the AI rally.

The episode underscored how concentrated that rally has become. With a handful of chip suppliers and platform giants accounting for an outsized share of index gains, a reset in sentiment toward any one of them can cascade across regions and asset classes within hours. The cross-asset reaction reflected the same caution: gold, silver and copper fell, Bitcoin headed for its sharpest drop in weeks, and the dollar pushed toward its highest level of the year, even as government bonds found some support as traders trimmed their expectations for further rate hikes.

Attention now turns to two near-term catalysts. Micron's quarterly results, due after the US close on Wednesday, are widely seen as the cleanest test of the memory-demand story, with investors focused less on the headline figures than on pricing trends and any change to capacity guidance. Beyond that, a key US inflation reading later in the week will shape the rate outlook that has done so much to unsettle the market.