London, 15 October 2026 — EBM Newsdesk Analysis — By Katie Winearls
On Thursday, South Korea’s Kospi fell 7.9% to 5,532.74, and Seoul briefly stopped trading for 20 minutes as losses mounted. Japan’s Nikkei 225 fell 5%. Samsung Electronics lost 11.4%, SK Hynix 12% and SoftBank Group 9.4%. The oddest detail came from Taiwan, where TSMC reported better-than-expected profits and said AI demand remains “very strong”, and markets fell anyway. The trigger was the hotter US inflation data published on Wednesday.
For European investors, this is not a distant Asian story. Pension funds and tech portfolios across Europe are heavily exposed to the same AI supply chain. When the companies making memory chips and chipmaking equipment fall 10% in a day, the shock reaches Amsterdam and Munich soon after. The ECB’s own economists warned in August that this boom was heading for a correction.
How the Sell-Off Spread
The selling started in New York. On Wednesday the S&P 500 fell 1.1% and the Nasdaq 1.9%. Nvidia dropped 3.2%, Broadcom 3.1% and AMD 5.7%.
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SubscribeThe cause was a single number. US consumer prices rose 3.7% in the year to September, up from 3.4% in August and above the 3.6% forecast. Core inflation also came in higher than expected. Kyle Rodda of Capital.com put it bluntly: “US inflation is sticky.” That raises the odds of another Federal Reserve rate rise.
Asia then took the hit, and Korea took it hardest. The Kospi crossed 9,000 in June and is now down more than 16% in a month. Foreign investors sold $1.8bn of Korean shares on Thursday morning alone, and more than $10bn so far in October. Japan’s Kioxia fell 13.1% and Tokyo Electron 7.8%.
Why Good News Didn’t Help
TSMC’s results should have calmed nerves. They didn’t, because the market is no longer asking whether AI demand exists. It is asking what that demand is worth when money costs more.
The US 10-year Treasury yield hit 5.35% earlier this month, its highest since 2002, and was still at 5.11% on Thursday. When yields are that high, investors pay less today for profits promised years from now, and AI stocks are priced almost entirely on those future profits. The global bond sell-off has turned that into a direct threat.
Debt is the second worry. Hebe Chen of Vantage Global Prime tied the selling to funding strain at CoreWeave, the AI cloud provider. Much of the AI building boom has been paid for with borrowed money, and the financing behind AI chips has grown more complicated and more expensive.
The Concentration Problem
Korea and Taiwan are heavily weighted towards a handful of chipmakers. That made them winners on the way up and leaves them badly exposed on the way down. Lorraine Tan of Morningstar said the key issue is “a possible mismatch between market’s growth expectations for the tech sector and what may eventuate.”
The IMF made the same point in a report on Thursday, warning that a correction in AI investment or valuations could hit Asia disproportionately. SoftBank is the clearest case. Masayoshi Son has staked the group on AI, and its shares now move like a leveraged bet on the whole trade.
The Bottom Line
This is a repricing, not a collapse. AI demand is real, and TSMC’s numbers prove it. What has changed is the price of money, and with it the price investors will pay for a promise.
Until US inflation turns down, every hot data point will hit the most crowded trade first, and AI is the most crowded trade in the world. European investors should check how much of their portfolio is quietly riding on it. Mine would be smaller than it was in June.
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