Investors weighed intensifying competition from China’s semiconductor industry

Asian equities fell sharply on Tuesday, with South Korea and Japan leading losses, as latest concerns over artificial intelligence investments sparked another wave of selling in international chipmakers.

Investors weighed intensifying competition from China’s semiconductor industry.

KOSPI slumped 10% to its lowest level since mid-April, triggering sidecar and circuit-breaker mechanisms earlier in the session.

Nikkei 225 dropped 4.4% to its lowest level since May 22, while the broader TOPIX index slid 2.7%.

SK Hynix Inc declined 13%, while Samsung Electronics Co Ltd shed 12%.

In Japan, Kioxia Holdings Corp dropped 18%, while Tokyo Electron Ltd., Disco Corp, Nikon Corp and Murata Mfg Co, slipped more than 9% each.

S&P/ASX 200 reversed earlier losses to add 0.5%, while Straits Times Index declined 0.3%. Nifty 50 was little changed.

Oil prices extended Monday’s sharp decline after Iran and Washington paused their strikes on each other and continued diplomatic efforts to end the war.

The retreat in crude prices helped ease inflation concerns, although it did little to offset the technology-led selloff across equities.

Chinese and Hong Kong technology shares proved more resilient than chipmakers despite broader weakness in mainland markets. Hang Seng traded flat, while the Shanghai Composite and Shanghai Shenzhen CSI 300 dropped 1.2% and 2.6%, respectively.

Chinese technology shares found support after CXMT Corp’s blockbuster Shanghai debut on Monday reinforced optimism over Beijing’s push for semiconductor self-sufficiency. Reports that Chinese firms have developed domestic immersion DUV lithography capabilities also boosted confidence that manufacturers could narrow the technology gap with overseas rivals.

The global DRAM market has long been dominated by Samsung, SK Hynix and Micron, with CXMT accounting for only about 10% of capacity. But fresh capital from its listing could allow it to capture a larger share of the market, Charlie Pullan, Global Markets Analyst at Finimize, said.