Asia's chip darlings are getting crushed after a blockbuster run

Asia’s chipmakers are rolling over after a strong AI-driven rally, as investors reassess high valuations and regulators curb speculative trading in South Korea. The reversal has been especially sharp for Japan’s Kioxia: the memory-chip company was the second-best performer among non-U.S. stocks in the MSCI All Country World index in the first half of the year, rising 631%, and it became Japan’s most valuable listed company last month. That momentum reversed quickly after Kioxia shares plunged 16% on Friday following an overnight sell-off in U.S.-listed memory stocks. The stock has since halved from its June peak, wiping about 30 trillion yen, roughly $185 billion, in market value. The sell-off spread regionally, with Taiwan Semiconductor down over 5% despite reporting 77% profit growth. In South Korea, Samsung Electronics and SK Hynix are down about one-third from peaks, following tighter rules on single-stock leveraged ETFs. Mohamed El-Erian warned about the risk of disorderly deleveraging and cross-border spillovers.