The Nikkei 225 tumbled as much as 4.4% on Friday, leading a broad selloff in Asian tech stocks that wiped out roughly ¥30 trillion ($185 billion) in market value. Chip-equipment maker Advantest and tech investor SoftBank each lost about 9%, while Taiwan's Taiex shed 4% as TSMC fell over 3% despite posting record quarterly profit. The index closed at 63,896.48.
Boom-Bust Cycle Claims Chip Stocks
Daiwa Securities chief strategist Yugo Tsuboi said the chip sector is vulnerable to boom-bust cycles. He pointed to rising scrutiny of Chinese memory chipmakers and signs that global memory prices may be stabilizing as factors behind the rout. The selloff accelerated after a Wall Street gauge of chip stocks slumped more than 4% on Thursday, with concerns over TSMC's AI spending overshadowing a solid earnings outlook. Traders have been rotating out of richly valued chip names into sectors that have lagged.
Bain Capital Exit Seen as Top Signal
Kioxia plunged nearly 16% on Friday, extending a slide that erased 44% of its value in one month. The stock had rallied over 600% since January and briefly surpassed Toyota to become Japan's most valuable company in mid-June, but has since dropped to fourth place. Last week, Bain Capital exited its entire position in Kioxia. Investors took that as a signal that the chip cycle is peaking. Kioxia listed in 2024 and became the best performer on the MSCI World Index before this month's reversal.
Retail Traders Face Leveraged Pain
Japanese retail traders hold heavy leveraged positions in Kioxia, leaving the stock exposed if selling accelerates. The Nikkei has shed trillions of yen in value over three weeks. Analysts still forecast roughly a 118% return for Kioxia over the next 12 months, but the near-term outlook is grim. The Topix index's October reshuffle is expected to draw fresh passive fund inflows into Kioxia, which could provide some support.
For now, the slide shows no signs of stopping. The stock's massive rally from January to June was built on AI hype and memory chip demand, but the exit of Bain Capital and the global rotation out of tech have reversed those gains. The Topix reshuffle in October may bring some passive buying, but the unresolved question is whether retail selling — and the broader tech selloff — will continue to pressure Kioxia until then.
