Asia Tech Stocks Plunge as China Pushes AI Governance
Asian equities suffered a severe tech selloff, with the Nikkei and Taiex tumbling, as China simultaneously positioned itself as a leader in both artificial intelligence development and global regulation.
Asian technology shares led a broad market retreat on Friday as investors pared back positions in a sector that has driven regional gains in recent months. Tokyo’s Nikkei 225 closed down 4%, while Taiwan’s Taiex shed 6.5%. The losses extended to Hong Kong and Shanghai, which fell 2.1% and 3.0% respectively.
Semiconductor stocks bore the brunt of the selling. TSMC dropped more than 7% despite posting record second-quarter profit and announcing a $100 billion investment in Arizona. In Tokyo, Advantest, Tokyo Electron and SoftBank all slid over 7%, while chipmaker Kioxia collapsed 16%, erasing roughly half its market value since peaking last month.
The regional declines followed a poor session on Wall Street, where sharp falls in Nvidia and Amazon pulled the Nasdaq down more than 1%. Netflix plunged 9% in after-hours trading after warning of slowing sales growth. Escalating military tensions between the US and Iran also rattled investors, pushing Brent crude above $85 a barrel.
China's AI Scale-Up
Against this backdrop of market volatility, the World AI Conference in Shanghai underscored the fierce technological competition driving these equity valuations. Chinese startups Moonshot AI and MiniMax unveiled powerful new models, while Huawei introduced its Atlas 950 "supernode" architecture.
Chinese AI models are rapidly closing the gap with US offerings, attracting international corporate users like Siemens with lower costs and open-source flexibility. Daily consumption of AI tokens in China has surged a thousandfold over the past two years, reflecting a massive scale-up in deployment.
The Governance Push
Recognizing the strategic stakes, President Xi Jinping called for international cooperation to regulate the sector. “AI development should not be a solo performance by a single country, but a symphony of international cooperation,” Xi said. He warned against using national security to stifle the industry and urged the implementation of monitoring and emergency response systems.
Foreign minister Wang Yi and representatives from 29 countries agreed to form the World Artificial Intelligence Cooperation Organization, headquartered in Shanghai. Sh
