SK Hynix shares plunge 10% amid Asia tech rout as Fed rate hike fears, AI funding worries mount

Key points

• SK Hynix shares fell more than 10% as Asian tech stocks sold off.
• Samsung Electronics dropped 8.73% and SoftBank Group lost 7.9%.
• Analyst Dan Ives said higher rates are a financing, not demand, issue.

A sell-off in global technology hardware stocks deepened Thursday, with Asian chipmakers tracking Wall Street losses. Concerns over further Federal Reserve interest rate hikes, financing for artificial intelligence investments and intensifying competition weighed on sentiment.

South Korean chip giant SK Hynix plunged more than 10%, while Samsung Electronics fell 8.73%. Other South Korean chip-related stocks also declined, including LG Innotek, down 8.95%, Seoul Semiconductor, down 9.28%, and Samsung SDI, down 6.26%.

Losses across Asia

In Japan, technology investment giant SoftBank Group tumbled 7.9%. Semiconductor testing equipment maker Advantest plunged almost 14%, chipmaking equipment supplier Tokyo Electron lost 6.45% and Renesas Electronics declined 8%. Taiwan's TSMC, the world's largest contract chipmaker, fell 1.81%.

The declines followed a bruising session on Wall Street Wednesday, where technology shares led broader market losses after hotter-than-expected U.S. inflation data fueled concerns that the Federal Reserve could raise interest rates further. The Nasdaq Composite dropped 1.88% to close at 26,692.87, the S&P 500 shed 1.11% to end at 7,718.94 and the Dow Jones Industrial Average slipped 0.09%.

Higher yields raise the cost of financing these builds, and investors are right to focus on balance sheets and contract structure, but rates are a financing question, not a demand question.

— Dan Ives, tech analyst at Yorkville Ives

AI funding and competition worries

Investors are increasingly concerned that higher borrowing costs could weigh on the massive capital spending required to build out AI infrastructure. Concerns around global memory chip oversupply as early as 2029, as manufacturers ramp up production capacity to meet surging AI demand, also weighed on sentiment.

China's ChangXin Memory Technologies said over the weekend that it had made a breakthrough on a new architecture that could boost memory density. Elon Musk said in an X post that China would be making "a LOT of RAM in 2028." Broadcom and Intel chief executives warned Monday that financing could become a major headwind to the AI boom, with Broadcom's Hock Tan saying it could be a bigger challenge than shortages of chips or electricity.