Asian tech stocks stage dramatic rebound after AI selloff deepens

Samsung Electronics and SoftBank fell sharply as AI valuation fears extended a week of heavy tech selling across Asia.tradingkey+1
South Korea announced plans to build four chip plants with roughly 800 trillion won in investment, helping the Kospi recover from a morning plunge exceeding 3%.tradingkey+1
The Nikkei 225 also reversed losses to close slightly higher, while the Hang Seng rose and the S&P/ASX 200 gained.halifax.citynews+1

Asian technology stocks plunged in early trading on Monday before staging a dramatic afternoon recovery, extending weeks of turbulence driven by mounting skepticism over artificial intelligence valuations. South Korea's Kospi tumbled more than 3% in morning trading while Japan's Nikkei 225 shed 1%, though both indexes clawed back most losses by the close.usnews+2

Samsung Electronics fell nearly 5%, while memory chipmaker SK Hynix declined about 1.7%. In Tokyo, SoftBank Group dropped more than 5%, weighed by concerns that OpenAI may delay its initial public offering until next year, potentially postponing returns for its largest backer.tradingkey+1

A Week of Carnage

Monday's volatility followed a bruising week for Asian tech stocks. The Kospi fell 5.8% on Friday alone after plunging as much as 9% during the session, triggering a circuit-breaker trading halt. The Nikkei lost 4.2% on Friday. The selloff was driven by what analysts described as a reckoning over stretched AI valuations after months of relentless gains had pushed the Kospi to a record high of 9,000 earlier in June.moneymorning+2

The Associated Press reported that Japan's and South Korea's markets had soared as Big Tech firms were lifted by demand for chips and components used in artificial intelligence, and "recent worries over AI valuations have trimmed some of those gains."usnews

Policy Response and Divergence

South Korea's government announced on Monday a plan to build four chip plants in the country's southwestern region with approximately 800 trillion won in investment, aiming to double DRAM production capacity within five years. The announcement helped fuel the afternoon rebound, with the Kospi narrowing its loss to just 0.02% by the close at 8,394.66.halifax.citynews+1

Markets elsewhere in Asia diverged from the tech-heavy North Asian indexes. Hong Kong's Hang Seng gained 2.1%, the Shanghai Composite edged 0.2% higher, and India's Sensex was nearly unchanged. Australia's S&P/ASX 200 rose 0.4%.wsls+1

The session underscored the fragility of the AI-driven rally that has defined Asian markets in 2026, even as governments race to secure their positions in the global semiconductor supply chain.

Sources (15)