Asia stocks fell Tuesday, with South Korean markets leading the losses amid growing concerns over spending linked to the artificial-intelligence boom.

Chip and technology stocks dragged equity markets lower across Asia after the U.S. Philadelphia Semiconductor Index fell 2.2% on Monday, extending a selloff into a third straight session and taking the index's cumulative loss over the period to more than 7%.

"Sentiment toward the semiconductor sector was also hit by a report that a Chinese state-backed company had begun mass-producing deep ultraviolet lithography chip-making equipment, potentially increasing competition with foreign suppliers," Commerzbank Research said, referring to a report by The Information saying a Shanghai-based company started making a homegrown version of chip-manufacturing machines.

South Korea's Kospi led declines across the region, heading for its largest one-day drop since plunging 12% on March 4, according to FactSet. The benchmark index was recently 10.3% lower, with chip-making index heavyweights SK Hynix slumping 13% and Samsung Electronics dropping 12.0%.

The steep losses prompted Korea Exchange to briefly suspend trading twice in each of the main Kospi index and the tech-heavy Kosdaq.

"The KOSPI rolled out of bed with its most bearish opening gap in four months," said Matt Simpson, senior market analyst at StoneX, in an email. "Its 10% decline for the day so far suggests we're in the 'despair' part of the sell-off, where traders are simply trying to rush to the exit before everyone else. And these sell-offs tend to get ugly as there are few buyers," Simpson added.

Japan's Nikkei Stock Average declined 4.0%, with memory-chip manufacturer Kioxia Holdings sliding 18% and semiconductor manufacturing equipment maker Kokusai Electric falling 14%. Singapore's FTSE Straits Times Index shed 0.2%, China's Shanghai Composite Index lost 1.0%, and Hong Kong's Hang Seng Index edged 0.1% lower.

"Investors remain concerned about the scale of AI-related spending and whether the rapid increase in [capital expenditure] would translate into sufficient returns," said Commerzbank analysts.

Meanwhile, crude-oil futures fell, as the pause in the U.S.-Iran conflict continued, with President Trump saying on Monday there was a "good chance that something good could happen" with Iran. The Wall Street Journal reported that Trump paused a major escalation in the military campaign against Iran amid efforts to revive diplomacy to open the Strait of Hormuz.

Front-month West Texas Intermediate crude oil futures fell 1.2% to $81.64 per barrel and front-month Brent crude oil futures dropped 1.2% to $87.29 a barrel, ICE data showed.

Write to Ronnie Harui at ronnie.harui@wsj.com

(END) Dow Jones Newswires

July 28, 2026 00:50 ET (04:50 GMT)

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