South Korea's Kospi falls 11% amid sharp sell-off in chipmakers
The Kospi index closed down 10.8% after Samsung Electronics and SK Hynix led a broad decline in South Korean chip stocks, driven by concerns over AI demand and competition from Chinese firms.
South Korea's benchmark Kospi index ended Tuesday 10.8% lower at 6,023.66, its steepest drop since April, as investors dumped shares of major chipmakers. Samsung Electronics fell 13.4% and SK Hynix slid 14.7%, pulling the market to its lowest level of the year.
Analysts linked the sell-off to growing worries that the artificial-intelligence boom could be overstretched and that rising competition from Chinese AI startups and chip producers may erode the advantage of established global players. A report that China has begun mass production of deep-ultraviolet chipmaking tools added to the pressure.
"We believe the market was likely spooked by the progress of China’s chipmaking equipment capabilities, and was worried that this progress would threaten the competitive position of global chipmaking and chip equipment leaders," said Morningstar equity analyst Jing Jie Yu.
Yu added that the reaction appeared to be a “knee-jerk” move and that the dominant position of leading chipmakers was unlikely to be meaningfully challenged.
The downturn in South Korea coincided with broader Asian market weakness. Japan's Nikkei fell 4%, Taiwan's Taiex dropped 4.7% and Shanghai's Composite slipped 1.2%. By contrast, Hong Kong's Hang Seng gained 0.4%.
U.S. futures were mixed, with the S&P 500 futures down 0.1% and the Dow futures up 0.3%. In the United States, major chip stocks also retreated, with AMD down 5.2%, Nvidia off 5% and Micron Technology falling 2.3%.
Oil prices continued to decline, with Brent crude down 2.2% to $84.03 a barrel as tensions between the United States and Iran eased.