Investors are aggressively retreating from the most speculative corners of the AI trade, as a wave of semiconductor selling pushed South Korea's benchmark index down 8%.
Concerns over Federal Reserve rate hikes and difficulties in AI financing dominated the market on Thursday, with SK Hynix and its memory chip peer Samsung Electronics both falling more than 9%.
As losses deepened, the Korea Exchange suspended trading for 20 minutes.
Japan's Nikkei 225 index dropped more than 5%, with semiconductor-related stocks such as Ibiden Co. and Kioxia leading the declines.
Data showing U.S. consumer prices rose at their fastest pace in five months fueled anxiety and drove market bets that the Federal Reserve will take more aggressive tightening action.
Adding to the pain, bond prices for CoreWeave Inc. fell to levels that typically signal distress, prompting investors to once again question the sustainability of massive AI infrastructure spending, and its share price plunged accordingly.
"As CoreWeave's financing issues and rising U.S. inflation intensify market worries about higher borrowing costs and the sustainability of AI spending, South Korea is becoming a shock absorber for the global AI stock selloff," said Hebe Chen, an analyst at Vantage Global Prime.
She said this is pushing investors to further unwind their positions in Samsung and SK Hynix.
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