Search & fact check with cited sources for What caused the sharp decline in Asian stock markets on Thursday, and how did chip stocks, TSMC's earnings, U.S. Iran geopolitical risks, and sector specific volatility in Japan and South Korea contribute to the selloff?

U.S.-Iran Geopolitical Risks

• Escalating conflict near the Strait of Hormuz added a fresh layer of uncertainty. Renewed tit-for-tat U.S. strikes on Iran and the end of the fragile ceasefire pushed crude oil prices higher and drove investors away from risk assets .
• The geopolitical risk weighed on sentiment across the region, particularly in energy-sensitive markets, and was cited alongside the chip rout as a key reason for the Thursday decline in Asian equities .

Sector-Specific Volatility in Japan and South Korea

South Korea (KOSPI):

• The KOSPI has been the hardest-hit major Asian index, having entered bear territory in July after a series of "Black Thursday" sessions .
• On July 16, the index fell sharply again (down ~2.7–5% in various sessions), with Samsung Electronics and SK Hynix — which together make up roughly half the KOSPI's market capitalization — plunging on AI demand fears .
• Memory chip maker SK Hynix lost 7.7% and Samsung dropped 7%+ in prior sessions, and the pattern repeated on Thursday as the chip rout deepened .

Japan (Nikkei 225):

• Japan's Nikkei 225 fell 2.7% on Thursday and subsequently slid into correction territory on Friday, pushed lower by the chip selloff and Middle East tensions .
• Japanese semiconductor suppliers and tech heavyweights tracked the regional rout; the "Samsung shock" from earlier in July (Samsung's weak preliminary earnings) had already infected Japanese chip stocks, leading to a second consecutive day of heavy declines .
• Tokyo Electron and other chip-equipment makers were among the biggest drags on the Nikkei .

Summary of the Causal Chain

Bottom line: The Thursday selloff was primarily a semiconductor-driven correction amplified by geopolitical risk and extreme concentration risk in the Korean and Japanese markets, where a handful of chip stocks dominate the benchmarks. TSMC's strong earnings were not strong enough to reverse the broader negative sentiment around AI spending sustainability and U.S.-Iran-related risk aversion.