Asian markets plunge as chip selloff spreads from Wall Street

Japan's Nikkei 225 dropped nearly 3% on Thursday, dragged lower by semiconductor-related stocks after a sharp overnight decline in the Philadelphia Semiconductor Index PHLX Semiconductor ↗ 2.42% on Wall Street. The selloff rippled across Asia, with South Korea's Kospi plunging more than 6% in one of the region's steepest single-day declines this month.tradingeconomics+3

Chip Stocks Lead the Decline

The Nikkei fell approximately 1,955 points to close at 66,797, according to Trading Economics data, as investors dumped shares of chipmakers and AI-related companies following a more than 3% drop in the Philadelphia Semiconductor Index on Tuesday. Micron Technology ↘ 2.05% fell nearly 8% in U.S. trading, while Intel ↘ 0.56% and AMD Advanced Micro Devices, Inc. ↗ 2.95% each lost over 5%.bignewsnetwork+2

In Tokyo, semiconductor names including Advantest and Kioxia were among the heaviest drags on the index, extending a pattern of chip-led volatility that has characterized trading throughout July. The broader Topix also declined but held up better than the Nikkei, suggesting selling remained concentrated in the technology sector.primexbt+1

TSMC Earnings in Focus

Investors across the region were closely watching Taiwan Semiconductor Manufacturing Company ↗ 2.96%, which reported Q2 2026 results on Thursday. TSMC posted quarterly revenue of $40.2 billion, with Reuters noting the results "blow past expectations." Despite the strong numbers, the earnings failed to stem the broader selloff in chip-adjacent stocks across the region.investor.tsmc+2

Geopolitical Risks Compound Selling Pressure

The market weakness came against the backdrop of renewed U.S.-Iran military exchanges that have kept oil prices elevated and investor sentiment fragile. President Trump declared an end to a fragile ceasefire in the Strait of Hormuz in early July, prompting fresh strikes and counter-strikes that sent crude oil prices higher and rattled global markets. The ongoing uncertainty has added a layer of risk to Asian equities already grappling with questions about stretched valuations in the semiconductor sector.cnbc+2

South Korea bore the brunt of Thursday's selloff, with the Kospi losing more than 6% as foreign investors continued to unwind positions in chip stocks following weeks of heavy selling. The session marked the latest in a series of volatile trading days across the region since the start of July.xtb+1