Japanese and South Korean stocks slid sharply as semiconductor shares took a hit amid growing concerns over Nvidia Corp.’s blockbuster AI supply deal and the escalating rivalry from Chinese chipmakers. The selloff reflected investor unease about Nvidia’s expanding role in the AI market and fears that Chinese competitors could erode its dominance.

The downturn was most pronounced in the technology sector, where shares of firms tied to chip production saw the steepest declines. Analysts warned that the combination of a tightening global supply chain, rising interest rates, and geopolitical tensions could further pressure the semiconductor industry.

Despite the market weakness, some analysts noted that the sector’s long‑term fundamentals remain solid, citing continued demand for AI and data‑center applications. However, short‑term volatility is expected to persist as investors monitor Nvidia’s partnership developments and Chinese firms’ production ramp‑ups.

Market participants are advised to keep a close eye on earnings reports and policy shifts that could affect the supply chain and to consider diversifying away from highly leveraged semiconductor stocks during periods of heightened uncertainty.