A brutal selloff in chipmakers rippled through global markets on Friday, triggering a rout across Asia and setting up steep losses in Europe and the U.S. as investors abruptly reassessed the durability of the artificial intelligence-driven rally.
Investors fled risk across Asia, sending MSCI's broadest index of Asia-Pacific shares outside Japan down 2.7%, while the Nikkei tumbled more than 5%, leaving it down more than 13% from its recent peak.
Taiwan's stock market bore the brunt of the selloff, plunging more than 6% for its worst day since U.S. President Donald Trump's "Liberation Day" tariffs, while China's blue-chip index fell 4%.
In Hong Kong, the Hang Seng Index slid 2.5%, and a 5% drop in the Hang Seng Tech Index also marked its sharpest fall since April 2025.
The selloff came even as Taiwan's TSMC announced second-quarter profit that blew past forecasts and ASML, the world's dominant supplier of equipment needed to make high-tech computer chips, raised its 2026 sales forecasts earlier this week.
"Retail investors have borrowed to trade in this really impressive AI rally, so I think the unwinding of leveraged positions will definitely exaggerate the decline as well. It will feed into the market," said Fabien Yip, a market analyst at IG.
"If tonight, the sell-off continues into the U.S. session, I think Korea, when it reopens, is going to be quite disastrous."
Markets in South Korea were closed on Friday for a holiday, a day after authorities announced they will temporarily ban new listings of exchange-traded funds (ETFs) that are tied to certain major technology firms, while raising minimum required deposits for retail investors to invest in such products, in an effort to curb volatility.
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