US chip stocks suffer worst day since 2020 as Democratic sweep raises data-centre curbs

S&P 500 companies lost roughly $2.9 trillion in market value on Thursday, the worst day for US chip stocks since 2020, as investors began pricing what a Democratic Congress might mean for the AI buildout. The Philadelphia Semiconductor Index closed down 12.2 percent — its steepest one-day fall in six years — while the Nasdaq dropped 5.5 percent and the S&P 500 fell 4.4 percent.

The trigger was political rather than technical. Democrats swept Tuesday's midterm elections, and roughly 40 percent of planned US data-centre capacity sits in states where governors or governors-elect have pledged or already imposed pauses on new projects, according to market intelligence firm Cleanview. Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez proposed a federal moratorium on data centres earlier this year. Voters in several states passed binding restrictions on data-centre construction in Tuesday's ballots — the first direct verdict on an infrastructure boom that has so far been decided by utilities, lenders and zoning boards.

The selling spread across the entire supply chain that the capex boom feeds. In Tokyo, Kioxia and SoftBank fell more than 10 percent and the Nikkei dropped as much as 7 percent before closing midday down 5.7 percent. Seoul's Kospi fell 8.8 percent at one point, triggering a twenty-minute trading halt, with SK Hynix down about 10 percent and Samsung Electronics down about 8 percent. Taiwan's Taiex closed 4.5 percent lower. Korean power-equipment makers — suppliers who never voted in a US election — were repriced on American zoning politics.

The financing layer is moving just as fast. ING is putting a portfolio of roughly $500 million in data-centre loans up for sale all at once, Bloomberg reported, while higher borrowing costs raise questions about how quickly companies can complete builds already announced. Neil Wilson of Saxo Markets called the sell-off overdone but said investors would want to see markets stabilise first. Donald Trump blamed "the Dumocrats" for the crash on Truth Social.

Oil moved the other way: Brent rose 1.4 percent to just under $100 a barrel, clawing back losses booked after the midterms on hopes for an end to the Iran war, as US and Iranian leaders signalled talks were advancing.

Hundreds of billions of dollars have been poured into AI on the promise of eventual returns. Thursday's lesson, delivered at 12 percent in a single session, was that the largest risk in that chain was never the model — it was the permission.