What triggered the region-wide sell-off in Asian stock markets?

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A report of a Chinese chip industry breakthrough triggered a region-wide sell-off in Asian stock markets.

A report detailing a significant advancement in China's chip manufacturing capabilities, specifically Shanghai Yuliangsheng's commencement of mass production for a technology previously dominated by ASML, acted as the primary catalyst for a broad decline across Asian stock markets. This development occurred amidst existing concerns regarding the sustainability of the artificial intelligence (AI) boom and its associated high valuations.
Semiconductor Companies Led the Decline

Technology and semiconductor firms were at the epicenter of the market downturn. In Seoul, SK hynix and Samsung experienced substantial losses, each shedding approximately 13 per cent of their market value, which contributed to a 10.2 per cent drop in the broader Kospi index. This downturn followed earlier circuit breaker suspensions for these companies.
Asian Markets Experienced Widespread Losses

The sell-off was not confined to South Korea. In Tokyo, Kioxia saw its stock plummet by 18 per cent, while Advantest and Tokyo Electron each fell by 11 per cent. Similarly, Taiwan's market was impacted, with the benchmark chip manufacturer TSMC experiencing a decline. These movements extended a pattern of losses seen across the global tech sector.
AI Boom Valuations Contributed to Market Weakness

The market's reaction was exacerbated by pre-existing anxieties surrounding the longevity of the AI sector's rapid growth. Investors had begun questioning the sustainability of the substantial investments made in AI technologies and the extended valuations that had resulted from a strong rally over the preceding two years, indicating a shift in market sentiment towards higher-risk assets.

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What triggered the region-wide sell-off in Asian stock markets?

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