Global technology shares fell sharply Wednesday, with Japan's SoftBank Group leading declines after a plan to raise at least $6 billion through a margin loan backed by its OpenAI stake ran into trouble. The Japanese investment giant dropped 8.3 percent on the day and is now exploring alternative funding options, though it may return to the loan idea later, according to Bloomberg News.
The selloff was broad. Japanese chip equipment makers Advantest and Renesas Electronics fell 4.2 percent and about 2 percent, respectively. In South Korea, memory chip giant SK Hynix dropped 7.5 percent and Samsung Electronics fell 6.1 percent. Display panel maker LG Display slid 7.6 percent.
Taiwan's semiconductor sector also came under pressure. Taiwan Semiconductor Manufacturing Co., the world's largest chipmaker, fell about 2 percent. In Europe, London-listed computing firm Raspberry Pi dropped more than 12 percent in early afternoon trading. Dutch chip equipment manufacturer ASML fell 1.3 percent. The Stoxx 600 Technology index led regional losses with a 1.6 percent decline.
The declines followed a rough session in the United States, where the tech-heavy Nasdaq Composite fell 0.97 percent and the S&P 500 slipped 0.26 percent. A semiconductor rally from the prior day quickly reversed. The iShares Semiconductor ETF dropped 1 percent during the regular session, and Nvidia was down an additional 2.1 percent before Wednesday's open.
Part of the pressure on existing technology stocks may stem from competition for investor capital. Upcoming listings from SpaceX, Anthropic, and OpenAI could pull money away from shares already trading on public markets. OpenAI filed confidentially for an initial public offering on Monday. SpaceX is scheduled to begin trading Friday in what is expected to be the largest IPO on record, with a valuation of $1.75 trillion. Bloomberg reported that the SpaceX offering has drawn billions in orders from Middle Eastern funds.
Andrew Jackson, equity strategist at Ortus Advisors, said the volatility could push some investors toward defense stocks. "With retail punters gnashing their teeth and looking for something new to play with, heavies could snap back into focus after their recent pullback," Jackson said, pointing to defense contractors as a possible beneficiary, particularly in Japan, where the government is expected to increase its focus on military spending.
The combination of a struggling funding deal at SoftBank, a massive upcoming IPO drawing capital away from the sector, and general concern about stretched AI valuations gave investors several reasons to sell. Whether the selloff continues will depend in part on how the SpaceX debut plays out Friday and whether OpenAI's IPO filing generates sustained enthusiasm or fresh skepticism about AI-related pricing.
