Chip stocks in Taiwan and South Korea fall on Iran tensions, then rebound

In short: Chip stocks in Taiwan and South Korea dropped sharply after U.S.-Iran tensions rose, then bounced back as investors kept betting on AI demand.

What's going on

Taiwan and South Korea sit at the center of the world’s chip supply, so their stock markets often move when investors get nervous. On March 3 to 4, 2026, shares of major chip companies fell fast as fears grew around a worsening conflict involving the United States and Iran.

In Taiwan, Taiwan Semiconductor Manufacturing Company, also called TSMC, fell 5.5% on March 3. Reports said the drop was driven by a broad shift away from risky stocks, not by any specific problem at TSMC. The selling also hit other chip and AI related stocks, even though the immediate trigger was geopolitical worry.

In South Korea, the market had an especially severe day on March 4, with trading briefly halted. Samsung Electronics fell 11.7% and SK Hynix dropped 9.6% as investors reacted to what some described as “war shocks.” While some commentary linked the fear to energy prices, reporting on these moves pointed mainly to geopolitics as the cause.

What to watch

The rebound that followed suggests many investors still expect strong demand tied to artificial intelligence. Chips are like the parts inside the machines that run AI, so when AI spending stays high, chip makers can look more attractive even after a scare. Investors are also watching upcoming updates, including TSMC’s February 2026 revenue report, due March 10.

Source: NYTimes