Asian equities sold off sharply, led by a 7.1% plunge in South Korea’s Kospi and a fall of more than 3.5% in Japan’s Nikkei 225. SK Hynix dropped almost 10% and Samsung Electronics fell more than 8%, extending a third straight day of weakness in chip shares. Investors are weighing concerns that AI capital spending may be excessive and could pressure returns, alongside uncertainty over a potential Federal Reserve rate hike and US-Iran negotiations. Several megacap technology firms are due to report earnings this week, with the durability of AI spending in focus.

Asia-Pacific chip shares sold off sharply, with Taiwan Semiconductor Manufacturing Co. falling even after reporting earnings that beat estimates and Japan’s Kioxia Holdings Corp. sliding 16%. The Philadelphia Semiconductor Index is down about 19% from a June peak, while Japan’s Nikkei 225 and Taiwan’s Taiex posted their biggest single-day drops in more than a year. Nasdaq 100 futures fell 1.6%, and Brent crude slipped 0.5% even as it remained up 10% for the week. Investors have been questioning whether AI-related capital spending will deliver returns, adding pressure to tech valuations.

Asian equities broadly retreated, led by a 4% drop in Japan’s Nikkei 225, while Taiwan Semiconductor Manufacturing Co. fell 3.6% after raising its capital-spending outlook and Kioxia plunged 13%, halving its market value within a month. Nasdaq 100 futures slipped nearly 1% as Netflix sank 9% in after-hours trading on signs of a second straight quarter of slowing revenue growth, and Alphabet fell 4.4% after reports its flagship AI model delivery is months behind schedule. The Philadelphia Semiconductor Index is down about 19% from a June peak, and Asian chip shares are heading for their biggest weekly decline since early March. Oil climbed, with Brent trading just above $85 a barrel and up 12% for the week amid escalating Middle East hostilities and weaker shipping traffic through the Strait of Hormuz.

Asian equities surrendered earlier advances as a semiconductor-led rally lost momentum while the US conducted a second day of strikes on Iran aimed at curbing threats to navigation in the Strait of Hormuz. Brent crude rose for a third straight session, pushing above $79 a barrel, and gold steadied around $4,075 an ounce after three days of declines. Renewed inflation concerns lifted rate expectations, with money markets bringing forward bets on the next Federal Reserve hike to October from December, according to Bloomberg.

Samsung Electronics plans to lift average third-quarter DRAM prices by about 20% from the prior three months and has verbally notified some customers, China Business News reported, citing people familiar with the matter. South Korea’s Kospi Index sank 2.4% to lead declines across Asia-Pacific markets, while the Philadelphia Semiconductor Index posted a 12% drop over two sessions. SK Hynix fell more than 3%, and Hon Hai reported a 40% jump in AI-related sales that failed to ease selling pressure across chip stocks. Investors are watching upcoming chipmaker earnings and weighing concerns that heavy AI investment has yet to translate into profits.

Samsung Electronics confirmed plans to raise DRAM prices by about 20% in the third quarter, while SK Hynix moved ahead with a $29 billion American depositary receipts listing. Hon Hai Precision Industry, an Nvidia server assembly partner, reported quarterly sales up 40% year on year. South Korea’s Kospi rose 1.8%, leading gains across Asia-Pacific. The developments provided a clear earnings and pricing catalyst for chip stocks, benefiting Samsung, SK Hynix and the broader Korean index.

Donald Trump’s military campaign against Iran may have ended, but the resulting jump in Middle East geopolitical risk has lifted the projected path for global interest rates for years. Bloomberg Economics says the short-term closure of the Strait of Hormuz and related energy-supply disruptions have added to inflation stickiness. In its guide to 23 major central banks, it sees several policy-rate endpoints more than 50 basis points above pre-war expectations over the coming years.