Key facts
- Asian markets fell sharply as Apple announced price hikes due to memory chip shortages.
- South Korea's Kospi index fell 5.8% and triggered a trading halt.
- SK Hynix and Samsung Electronics shares declined significantly.
- Japan's Nikkei 225 dropped over 4%, with SoftBank shares plummeting 12.5%.
- Taiwan and mainland China markets also experienced sharp declines.
- Concerns over AI valuations and the sustainability of chip demand are driving the sell-off.
Asian stock markets experienced a sharp decline on Friday, with South Korea's Kospi and Japan's Nikkei 225 indices leading the losses. The sell-off was triggered by Apple's announcement that it would increase prices for Macbooks and iPads by 20% globally, citing memory chip shortages amid the ongoing AI boom. This move has fueled concerns about the sustainability of demand for AI-related products and the durability of chip margins.
South Korea's Kospi index suffered the most significant losses, tumbling 5.8% and forcing trading halts. Major chipmakers SK Hynix and Samsung Electronics saw their shares plunge 9.1% and 6.2%, respectively. In Japan, the tech-heavy Nikkei 225 fell more than 4%, with semiconductor firm Tokyo Electron down 3.2%. Taiwan's TAIEX also dropped 3.6%, with TSMC declining 2.1%.
The market downturn was exacerbated by reports that OpenAI, a significant AI investment for SoftBank, might delay its highly anticipated public market debut until next year. This news caused SoftBank's share price to plummet 12.5%, and its US-listed subsidiary Arm Holdings also fell 3.1%. Analysts expressed sensitivity to worries about the longevity of demand for chips powering the AI revolution, with rate hike fears and supply chain issues contributing to the selling pressure.
Analysts noted that with valuations stretched, even slight sentiment shifts result in large moves. Concerns exist about how long the demand for AI chips will last and whether consumers will continue paying higher prices, regardless of brand loyalty.