The Nikkei was dragged lower by steep declines in heavyweight technology and electronic component makers

Nikkei 225 slumped more than 5% on Friday to its lowest level since June 11, leading a broad selloff in Asian technology shares as investors continued unwinding AI-linked positions. Chinese technology shares also extended losses, while South Korean markets were closed for a public holiday.

The Nikkei was dragged lower by steep declines in heavyweight technology and electronic component makers. Memory producer Kioxia Holdings Corp plunged more than 16%, marking its biggest decline in months, while Murata Mfg Co dropped almost 12% and TDK declined more than 6%. Sony bucked the broader weakness, gaining around 1.6%.

The selling spread across Greater China, where the CSI 1000 shed more than 3% to its lowest level since March 24, reflecting heavy losses in small and mid-cap technology stocks.

AI chip designer Cambricon Technologies Corp Ltd slipped more than 6%, while Foxconn Industrial Internet Co Ltd shed over 5%. Semiconductor names including SMIC, NAURA Technology and Luxshare Precision also slid, reflecting broad selling across China’s AI hardware supply chain.

The Hang Seng Index declined more than 2%, with technology heavyweights Meituan and Kuaishou dropping nearly 6%, while Tencent Holdings, Baidu, Alibaba and Xiaomi shed between 2% and 4%.

Analysts remain constructive on AI sector’s longer-term outlook. ANZ said in a note that the global semiconductor supercycle is not showing signs of stopping yet, citing stronger-than-expected second-quarter GDP data across much of Asia, with the exception of mainland China.

The bank said the Global Electronic Computing PMI points to an acceleration in economic growth in the third quarter and argued that the ongoing AI investment boom should continue to underpin Asia’s growth outlook through the second half of 2026, helping economies absorb higher oil prices.