Tokyo, Taipei lead Asia market rout as AI worries hammer tech

Tokyo, Taipei lead Asia market rout as AI worries hammer techSign up now: Get ST's newsletters delivered to your inboxJapan’s Nikkei fell as much as 4 per cent as chipmaker Kioxia sank 16 per cent. PHOTO: REUTERSPublished Jul 17, 2026, 11:07 AMUpdated Jul 17, 2026, 11:07 AMSet as preferred sourceHONG KONG - Tokyo and Taipei led losses on a glum day for Asian markets on July 17, with tech firms once again in the crosshairs as investors cash in following this year’s breathtaking rally.The AI boom has sent technology valuations soaring to record levels as traders looked to get a slice of the next big thing while firms splashed out enormous amounts of money in investment.

But questions have been raised in recent months about whether valuations have gone too far and when companies will actually see any returns.Worries about the AI trade have hammered the value of chip firms, with the Philadelphia Semiconductor Index losing about 19 per cent from a June peak, according to Bloomberg.Asian markets have been hammered, with Seoul’s Kospi bearing the brunt of the selling, having more than doubled in the first six months of the year before losing about a third of its value since hitting a record in June.

But with South Korean markets closed for a holiday on July 17, Tokyo and Taipei – which are also heavily weighted toward tech – bore the brunt of the selling.Japan’s Nikkei sank as much as 4 per cent with Advantest and tech investment titan SoftBank losing around 9 per cent.Chipmaker Kioxia collapsed 16 per cent, meaning it has lost more than half its value since hitting a record high and becoming the country’s biggest firm by market capitalisation in June.

Taiwan’s Taiex also shed 4 per cent as chipmaker TSMC retreated more than 3 per cent a day after announcing record second-quarter profit and that it would invest a further US$100 billion (S$129 billion) in the US state of Arizona.There were also losses in Hong Kong, Shanghai and Singapore, where the Straits Times Index was down 0.5 per cent at 10.

53am local time.“It looks like the rally in artificial intelligence-related stocks appears to be losing some momentum after months of almost uninterrupted gains,” said Fawad Razaqzada, a market analyst at Forex.com.

“Given the pace of the prior advance, some consolidation was always likely. But there are some investors who are increasingly questioning whether the enormous sums being committed to AI infrastructure can generate sufficient returns within a reasonable timeframe.”However, he added that the selling “could simply reflect a period of portfolio rotation”.

“Some investors may prefer to lock in profits from richly valued semiconductor names and reallocate capital towards sectors offering more attractive valuations and steadier earnings visibility,” he wrote.The dour mood in Asia followed losses in New York, where sharp falls in Nvidia and Amazon helped drag the Nasdaq down 1.5 per cent on July 16.

And Netflix plunged 9.1 per cent in after-hours trade as it warned of a second quarter of slowing sales growth.“The AI trade keeps learning the same lesson the hard way: when a stock goes vertical, it does not need bad news to come down.

It just needs buyers to stop paying any price,” said SPI Asset Management’s Stephen Innes.Oil prices jumped 1 per cent as the US and Iran continued to exchange strikes in a flare-up that has seen traffic through the key Strait of Hormuz fall back to a trickle.The renewed hostilities have fanned fears of a return to war that could send crude prices back higher, putting fresh pressure on inflation and eventually forcing central banks to hike interest rates.

AFPMore on this topicNetflix shares tumble as growth forecast disappointsWall Street ends lower as chip weakness offsets solid earnings, economic dataSee more onStock marketAsiaAI/artificial intelligenceTechnology sector