Asia's chip stocks plunge on US data-centre fears: Kospi halted, Nikkei in a bear market

On Friday morning in Seoul, South Korea’s stock market had been open for about three minutes when trading stopped. The Kospi index was falling so fast that an automatic 20-minute pause, called a circuit breaker, kicked in, the Korea Herald reported. By the close, the companies that make the chips inside the world’s phones, laptops and AI servers had lost heavily across Asia.

Why are tech stocks down today? The short answer is a vote in the United States. Democrats won both houses of Congress in the 3 November midterm elections, and many of the winners campaigned against new AI data centres. Investors who had counted on years of data-centre building took fright, and Asian stocks fell hardest where the big chipmakers live: Taiwan, South Korea and Japan.

A record point drop in Taipei and a pause in Seoul

Taiwan’s main index, the Taiex, closed at 39,701.64 on 6 November, down 1,873.08 points or 4.51%, according to the Taiwan Stock Exchange. At its lowest it stood at 37,837.05, about 3,738 points or roughly 9% below Thursday’s close. Nikkei Asia called it a record fall in points within a day. It won back part of the loss by the close.

It was the fifth straight day of falls, leaving the Taiex 12.2% below its level on 30 October. Turnover, at NT$1.32 trillion, was the week’s highest, exchange figures show.

• Fri 30 Oct45,211.83
• Mon 2 Nov44,920.14
• Tue 3 Nov43,307.54
• Wed 4 Nov42,948.91
• Thu 5 Nov41,574.72
• Fri 6 Nov39,701.64

Closing level of the Taiex. 30 October is the previous Friday, for comparison. Source: Taiwan Stock Exchange: TAIEX daily history

In South Korea, the Kospi fell as much as 8.7% and briefly dropped below 5,000 points, according to Nikkei Asia and Korea JoongAng Daily. It closed at 5,059.65, down 6.02%, IBTimes Australia reported; the BBC also put the fall at 6%. SK hynix, the memory maker, fell more than 10%. Samsung Electronics lost about 6.4%.

Japan’s Nikkei 225 closed down 5.96% at 57,434.77, CNBC reported. That leaves it more than 20% below its June record, which NBC News described as a bear market. Advantest fell more than 10%, Kioxia and SoftBank Group about 11% each, and Tokyo Electron 7.3%. Kioxia had already fallen sharply over a flat outlook on Monday.

Why are tech stocks down today? A data-centre bet meets a vote

Wall Street went first. On Thursday the Nasdaq Composite fell 5.5%, and about US$2.5 trillion of value disappeared, according to the BBC; Nation Thailand reported the same figure.

The worry is political. Texas governor-elect Gina Hinojosa has pledged a moratorium, or pause, on building new data centres. Senator Bernie Sanders has called for a “national data center moratorium”. Dozens of local ballot measures also targeted the buildings, the BBC and NBC News report.

Charu Chanana of Saxo told NBC News that markets were being punished according to how much they depend on the US build-out of AI infrastructure. Tai Hui of J.P. Morgan Asset Management said Asia’s chip firms are tightly linked to global AI spending.

Fears, not yet a law

No data-centre bill has been put forward in Congress, and the new Congress does not sit until January. Nobody knows what, if anything, will pass. In practice, campaign promises often change once leaders have to weigh jobs, power supply and local budgets. That is analysis, not a forecast.

If your savings hold chip stocks, what this does and doesn’t mean

For most readers, nothing changes in the shops this week. A share price is what investors will pay for a slice of a company’s future profits. It does not change what a phone or laptop costs on the shelf today.

Many people own these companies through pensions and index funds, because the main indexes in Taiwan, South Korea and Japan carry a lot of chipmakers. A one-day fall, even a big one, is not a final result. This is not investment advice; if you are worried, a licensed adviser can look at your own situation.

What to watch: how Wall Street trades on Friday, whether a data-centre bill appears once the new Congress sits, and the next results from the big AI spenders and chipmakers.

A painful repricing of one big bet, not a broken industry

On balance, Friday looks less like a verdict on the chip industry and more like investors repricing one belief: that US data-centre building would keep growing with few limits. The concern is fair, because opposition to new data centres clearly won votes.

But the reports point to politics in Washington as the trigger, not to news from the companies. Only weeks ago, TSMC reported another record quarter and SK hynix earned a record quarter from AI memory. Our reading is that what changed on Friday was less the companies than how sure investors feel about the next few years.

The real test comes in January, when the new Congress sits. Until then, the number to watch is not one day’s fall, but whether anyone turns campaign fears into a law.