Asian Chip Stocks Tumble on Renewed AI Bubble Fears

By Kwanwoo Jun and Kimberley Kao

Asian semiconductor stocks tumbled Friday on renewed fears of an artificial-intelligence bubble, tracking U.S. chip stocks' decline overnight.

Shares in Samsung Electronics and SK Hynix--the world's two largest memory-chip makers--slumped as much as 6.0% and 10%, respectively, in morning trading. Both were last down well over 5%, erasing most of their gains from the previous day. The benchmark Kospi was recently down around 3%.

The selloff in South Korean chip makers followed a sharp reversal in U.S. semiconductor stocks, including AI-chip maker Nvidia, which gave up early gains to close sharply lower Thursday. Concerns about an AI-bubble resurfaced after a brief rally driven by Nvidia's robust earnings report. Both Samsung and SK Hynix supply high-bandwidth-memory products to Nvidia.

Some investors worry that AI stocks have become overvalued, especially given companies' increasingly aggressive spending plans. An AI bubble was cited as the top tail risk by 45% of institutional investors in Bank of America's latest monthly survey.

A majority of respondents were concerned that companies are overinvesting--a jump "driven by concerns over the magnitude & financing of the AI capex boom," BofA said.

Technology companies are expected to spend trillions of dollars in the coming years on AI data centers, despite questions about how much revenue AI will actually generate.

The survey found that 53% of investors believe AI stocks are already in a bubble.

"Asia is reacting to a combination of global AI-valuation concerns and region-specific pressures," said Tareck Horchani, head of prime brokerage dealing at Maybank Securities.

"The reversal in Nvidia and the broader U.S. tech space has forced investors to reassess whether AI spending can deliver near-term earnings, which directly hit markets like Korea and Taiwan where semiconductors dominate benchmark weights," Horchaini said.

Heavier foreign outflows are being seen in the Kospi, as reports of memory-chip buyers diversifying toward Chinese DRAM suppliers have amplified concerns that Korean chip makers' current pricing strength may be peaking, he said.

Taiwan's Taiex was last down 3.4%, dragged lower by heavyweights Taiwan Semiconductor Manufacturing and Foxconn Technology Group, both of which fell more than 4%. TSMC and other major electronics makers declined as investors reassessed global AI demand and questioned the sustainability of data-center spending amid rising inventories across the supply chain, according to Horchaini.

In Japan, a tech selloff was compounded by renewed yen volatility, which has left exporters grappling with softer global demand and currency uncertainty, he said. SoftBank Group and Advantest each plunged over 10%, dragging the Nikkei Stock Average down more than 2%.

In Hong Kong, Chinese chip makers Semiconductor Manufacturing International and Hua Hong Semiconductor each lost more than 5%.

Write to Kwanwoo Jun at kwanwoo.jun@wsj.com and Kimberley Kao at kimberley.kao@wsj.com