Asian tech stocks deepened their rout as CXMT's chip advance hit Samsung and SK Hynix shares.

Asian equities tumbled on Tuesday as a deepening selloff in semiconductor shares spread from Wall Street. Fresh evidence of progress by a Chinese memory-chip maker intensified fears about competition and the durability of returns from artificial-intelligence spending.

The MSCI Asia Pacific Index declined as much as 2%, putting the regional benchmark on course for its weakest close since August. The heaviest damage was concentrated in Seoul, where the KOSPI plunged 7.2% to 5,923.37, its lowest level since July. Japan's Nikkei 225 dropped 2.7% to 67,200.5 as trading resumed after a long weekend.

The rout followed a sharp pullback in US technology shares. The Philadelphia Semiconductor Index sank 2.7% to its lowest level since mid-September, and the Nasdaq Composite fell 0.5%. Nasdaq 100 futures lost another 0.8% during Asian hours, while S&P 500 futures slipped 0.2%.

South Korean memory-chip manufacturers absorbed the brunt of the selling. SK Hynix fell as much as 8.9% in early trading, Samsung Electronics dropped 8%, and LG Innotek slid 8.9%. The declines followed reports that China's CXMT is advancing a higher-density 4F² DRAM design, with next-generation server-memory products targeted for year-end. The development raises competitive pressure on established players. CXMT shares fell 2.4%.

The weakness rippled through the regional technology supply chain. Taiwan Semiconductor Manufacturing declined 1.6%, Foxconn lost 2.1%, and Largan Precision slipped 0.6%. In Japan, Kioxia plunged 12.4%, TDK dropped 6.2%, and Murata Manufacturing fell 6.9%.

US-listed memory names had already signaled the direction of travel on Monday. Sandisk slid 6% and Micron Technology declined 3.9%. Meta Platforms bucked the trend, rising more than 3% after unveiling its Muse Wonder AI model.

Investor anxiety over the AI trade has been building for weeks. On Monday, Broadcom Chief Executive Hock Tan added to the caution, warning that some participants in the AI boom were taking positions without fully understanding the businesses or technology behind them. He suggested that some of those investors have little grasp of what they are betting on.

Last week, billionaire Ray Dalio described AI as a "classic bubble" nearing a bursting point, citing rising interest rates and the need to convert wealth into cash. The warnings come as the S&P 500 Index trades nearly 120% above its 2022 low, leaving the four-year bull market increasingly dependent on earnings keeping pace with stretched valuations.

"The selling pressure across AI-related equities remains a defining feature of the market," wrote Chris Weston, head of research at Pepperstone. "Semiconductor stocks have broken below recent trading ranges."

Anna Wu, investment strategist and founder of Floodlines Research, said the semiconductor sector had become especially sensitive to any sign of disappointment after its strong gains. Across 14 major AI companies, 23 of 42 earnings reports this year beat forecasts without winning a positive market reaction. In the latest reporting season, six of the 14 companies that beat estimates were still sold or ignored, compared with seven and 10 in the first two seasons, respectively.

Oil prices retreated but remained elevated amid escalating Middle East tensions. Brent crude slipped about 1.1% to around $105.50 a barrel, trimming its recent advance but staying near a two-week high. The market weighed Houthi attacks on Saudi Arabia against the prospect of increased Russian diesel supplies. Iran-backed Houthi forces struck Riyadh's main airport over the weekend, raising fears of a wider conflict, while a claim of a Russia-Ukraine energy truce remained unconfirmed.

The dollar held broadly steady, retaining gains from the previous session, when a Bloomberg gauge of the greenback's strength climbed to its highest level since mid-May 2025.

Attention now turns to the US earnings season, which begins in earnest on Tuesday with Goldman Sachs, JPMorgan Chase, Citigroup and Wells Fargo scheduled to report. Bank of America and Morgan Stanley follow on Wednesday. S&P 500 companies are estimated to post a 25% increase in third-quarter profits from a year earlier, according to data compiled by Bloomberg Intelligence.

Investors are also bracing for this week's US consumer price index report, due Wednesday, with producer prices and retail sales to follow. Any upside surprise in inflation could revive expectations of tighter Federal Reserve policy and renew pressure on long-term yields.

Federal Reserve Bank of Cleveland President Beth Hammack said smaller, more frequent policy adjustments can help keep inflation expectations anchored, though she stopped short of backing another rate increase in October.

"This week's CPI report is likely to be the most important release of data the Fed will see before its October meeting," wrote Jason Pride, chief of investment strategy and research at Glenmede. "Barring a stronger than expected inflation reading, the Fed is likely to take a patient approach to its next rate hike."

In Asia, focus will also fall on the Indian rupee. The nation's most aggressive currency defense in more than a decade signaled that the central bank is prepared to pull out all the stops to keep the currency from weakening beyond 97 per US dollar.

Japan's producer-price inflation eased to 6.8% in September from 7.6% in August, below forecasts. However, a 24.5% jump in yen-based import prices, driven by currency weakness and higher raw-material costs, could keep pressure on the Bank of Japan to tighten policy at its October 29-30 meeting.

The Reserve Bank of Australia's September minutes, released Tuesday, showed a unanimous 25-basis-point rate hike to 4.60%. The decision was driven by energy prices, AI-related demand and capacity constraints, despite slowing output growth and weaker household spending.

The convergence of chip-sector anxiety, elevated oil prices and a dense calendar of central bank and earnings events leaves Asian markets facing a volatile stretch as investors reassess the valuations that have powered the region's technology-heavy benchmarks higher.