Japanese technology stocks experienced significant declines on Friday, mirroring a sharp sell-off in U.S. semiconductor shares and intensifying concerns about the sustainability of AI-related spending. SoftBank's shares fell 8.8%, while Tokyo Electron and Advantest dropped 9% and 9.4% respectively, tracking steep overnight losses on Wall Street. Kioxia, a Japanese memory chipmaker, plunged over 14% after a federal jury in Texas ordered the company to pay $229 million in damages for infringing a Viasat patent related to computer memory technology [1].
The sell-off was not limited to Japan. On Thursday, SK Hynix shares in South Korea closed over 11% lower, and U.S.-listed shares of SK Hynix slumped more than 13%. The Nasdaq Composite fell 1.47%, while the VanEck Semiconductor ETF dropped nearly 4%. Major U.S. chipmakers such as Arm Holdings, Micron Technology, Advanced Micro Devices, and Broadcom each lost more than 5% [1].
TSMC announced an increase in its full-year capital expenditure forecast to between $60 billion and $64 billion, up from a previous range of $52 billion to $56 billion. However, investors appeared more concerned about the industry's aggressive investment cycle and whether such spending is justified, rather than being reassured by the increased forecast [1].
According to Andrew Jackson, strategist at Ortus Advisors, the sell-off reflects an unwinding of crowded AI momentum trades rather than a deterioration in the sector's long-term fundamentals. The recent losses extend a sharp reversal in global AI-related shares after months of outsized gains, as investors increasingly question whether high valuations can be sustained amid accelerating AI infrastructure spending [1].
CONCLUSION
The widespread sell-off in Japanese and global semiconductor stocks signals mounting investor caution over the sustainability of AI-driven gains and aggressive industry spending. While some analysts view the downturn as a correction of overextended momentum trades, the market impact is significant, with key players suffering steep losses and valuations coming under scrutiny.