BENGALURU (July 17): Asian shares fell for a second consecutive session on Friday, with Taiwan bearing the brunt of a chip-stock sell-off, as investors reassessed the durability of the artificial intelligence (AI)-driven global rally.

TSMC, the world's top contract chipmaker and a key Nvidia and Apple supplier, shed more than 7% to end at a five-week low despite reporting record quarterly profit on Thursday. The stock marked its worst week since early March. 

Taiwan's semiconductor-heavy benchmark posted its worst week since early April 2025, falling more than 6% on the day to its lowest close in nearly two months. 

Investors are taking another step towards scrutinising chipmakers' ability to monetise, said Glenn Yin, director of research at ACCM, adding that despite TSMC's record quarterly profit, investors are focused on higher capital expenditure and overseas expansion costs. 

The MSCI EM Asia equities index slumped as much as 3.3%. Taiwanese stocks make up one-third of the index. 

"Taiwan is one of the cleanest liquid proxies for AI chip demand. When positioning is crowded, even a strong result can trigger profit-taking if the upside surprise is not enough," said Billy Leung, investment strategist at Global X ETFs Australia.

The chip-heavy South Korean benchmark Kospi ended the week nearly 9% in the red, rounding off a turbulent week of sharp swings in memory chipmakers, the first rate hike in over three years, and regulatory intervention in single-stock leveraged funds that are behind much of the upheaval. 

The market was closed on Friday.

Volatility in chipmakers could ease on greater signs about hyperscaler AI capex remaining durable and higher foundry spending translating into sustained earnings growth, said Leung.

In Singapore, equities fell as much as 0.8% to extend declines from the previous session, while the currency was steady at 1.2899 a dollar. 

In Malaysia, stocks were up 0.8% while the ringgit weakened marginally to 4.081 per US dollar, its lowest since early July. Data showed that Malaysia's economy grew 5.8% in the second quarter from a year earlier.

Shares in the Philippines advanced as much as 1.4%, their highest since early March, while those in Jakarta gained as much as 1%, logging their seventh straight session of gains. 

Both the Thai baht and the Taiwan dollar weakened to their lowest since late April 2025. The rupiah extended gains into a fourth day, firming to 17,935 a dollar for the first time in two weeks.

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