Asia FX Talk - Risk-off with semiconductor stocks lower - MUFG Research

The recent market risk-off sentiment has led to a sharp sell-off in semiconductor stocks, with the KOSPI index falling nearly 10%. This downturn stems from doubts over the sustainability of the AI-dri... Read original →

The semiconductor sell-off reflects valuation recalibration after AI hype, not deteriorating fundamentals. Heavy capex on 3nm and EUV tools has inflated costs; any slowdown in AI server demand could pressure TSMC (Taiwan, China) and Samsung’s advanced node utilization. Equipment and material suppliers face immediate order cuts, while cloud providers leverage the dip to renegotiate pricing. Geopolitically, a strong dollar and rigid Fed policy amplify capital outflows from emerging Asia, though export-resilient economies like South Korea and Vietnam fare better. Over the next 12–24 months, firms lacking real AI workloads will see valuations collapse, while leaders in chiplet, advanced packaging, and heterogeneous integration capture the next tech wave. Rising compliance burdens and localization mandates will further force strategic realignment of regional capacity.