Asian chipmakers slide as AI spending doubts and central bank decisions loom

Key points

• Asian indices fell, with Japan's Nikkei 225 down 0.8% and South Korea's KOSPI down 1.5%, as semiconductor shares led the decline.
• Renesas Electronics and Tokyo Electron in Japan dropped more than 3.5% each, while Samsung Electronics fell 1.2% in South Korea.
• In China, the CSI 300 index slipped 0.3%, and Hong Kong's Hang Seng rose 0.4% despite weakness in chipmakers like SMIC and Hua Hong Grace Semiconductor.
• Investors are scrutinizing upcoming quarterly results from Microsoft, Alphabet, and Amazon to determine if AI infrastructure investments are generating sufficient returns.
• Central bank decisions are expected this week, with the Federal Reserve likely to hold rates, the Bank of Japan expected to keep rates at 1.25%, and New Zealand's central bank anticipated to raise rates.
• Oil prices eased on Monday after surging to six-month highs last week due to Houthi attacks in Saudi Arabia, limiting some equity losses.

Background

This development follows a period of strong performance in semiconductor and technology stocks, with the Nasdaq reaching record highs in September 2026. Recent market volatility has also been influenced by geopolitical tensions, including the US-Iran conflict, which affected oil prices and market sentiment in late September. The current focus on AI spending sustainability contrasts with the earlier rally driven by optimism in the tech sector.

Why it matters

The decline in Asian chipmakers reflects growing investor skepticism about the profitability of massive AI infrastructure investments. The upcoming earnings from major U.S. tech companies will be critical in determining whether these expenditures translate into sustainable revenue growth. Additionally, central bank decisions and elevated oil prices could impact inflation expectations and borrowing costs, influencing global market trends.

What to watch

Investors will closely monitor the quarterly earnings reports from Microsoft, Alphabet, and Amazon for evidence of sustainable AI-driven revenue growth. Central bank decisions from the Federal Reserve, European Central Bank, and Bank of Japan will also be crucial, as they may provide guidance on future borrowing costs. Oil prices will continue to be watched for their impact on inflation and market sentiment.