• South Korea lost $203 billion as the KOSPI plunged 5.28% amid heavy semiconductor selling.

• Japan's major stocks SK Hynix dropped 9.46%, while Samsung Electronics fell 7.57% during the sell-off.

• Investors fear tighter US AI data-center rules could slow the sector’s massive spending boom.

A massive sell-off hit Asian stock markets today, wiping out nearly $550 billion from South Korea, Taiwan and Japan, sending chipmakers stocks sharply lower. The decline came as investors worried that stricter data center rules following the Democrats’ midterm victory could slow AI spending.

While AI stocks fell sharply, Bitcoin, the leading cryptocurrency, gained 4% to trade around $80,242.

South Korea Takes the Biggest Hit

South Korea suffered the largest decline, with about $203 billion erased from its stock market. The KOSPI plunged 5.28% to around 5,383, forcing the Korea Exchange to activate a five-minute suspension on program sell orders after KOSPI 200 futures losses exceeded 5%.

The KOSPI has now fallen nearly 24% over the past month. However, Semiconductor giants led the sell-off. SK Hynix fell 9.46%, while Samsung Electronics dropped 7.57%.

Even the Philadelphia Semiconductor Index fell 3.1% to a six-month low, adding pressure to Asian chipmakers.

Taiwan and Japan Also See Chip Sell-Off

Taiwan’s stock market lost around $182 billion today, with its benchmark TAIEX falling 3.28% to 42,314, its lowest level in three months.

Major technology stocks led the decline. MediaTek fell 6.86%, Delta Electronics dropped 7.38%, and ASE Technology lost 9%. TSMC also faced a 2.5% drop as investors reduced their exposure to semiconductor stocks.

Japan’s market lost another $160 billion, with the Nikkei 225 falling 3% to around 61,077. SoftBank Group dropped 7%, while Tokyo Electron, Kioxia Holdings and Advantest fell 9.42%, 13.14% and 14.71%, respectively.

However, some non-tech stocks moved higher. Fast Retailing gained 4.72%, while Toyota Motor and Mitsubishi UFJ also recorded gains.

AI Regulation Fears Hit Chip Stocks, but Chinese Stocks Rise

The main concern is that Democrats could push for stricter rules on AI companies and data centers after taking control of both chambers of Congress. Investors fear new restrictions could delay data center projects, increase power infrastructure costs, and slow AI spending.

These concerns have raised fears of lower demand for chips, putting pressure on Asian markets that depend on semiconductor exports and US tech companies.

However, Chinese tech stocks moved higher. Moore Threads gained 3.29%, while Shanghai Biren Technology rose 2.5%. The Hang Seng Tech Index also jumped 4.5%, led by gains in Alibaba and Meituan.

Their lower dependence on US AI infrastructure spending also helped them stand out during the sell-off

Gold, Silver, and Bitcoin Jump While Oil Price Drops

While AI stocks face a sharp sell-off, gold and silver have recovered, rising 1.7% and 1%, respectively. Meanwhile, Brent crude oil fell 8.7% to $94.68 per barrel.

Bitcoin also gained more than 4%, climbing to $81,000.

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