KOSPI Plunges Nearly 10% As Chip Rout Triggers Trading Halt

South Korea’s KOSPI plunged nearly 10% on Tuesday as investors accelerated their exit from the semiconductor stocks that powered the market’s artificial intelligence rally.

The benchmark traded near 6,089, down 666 points, after falling as low as 6,031.38. The intraday low placed the index more than 35% below its June record of 9,385.59.

The Korea Exchange halted trading in KOSPI-listed shares for 20 minutes at about 10:14 a.m. Korea Standard Time after the decline remained above the 8% circuit-breaker threshold. It was the seventh market-wide circuit breaker activated in South Korea this year.

Sell-side sidecars had already suspended program trading on both the KOSPI and Kosdaq shortly after the open. Regular trading resumed after the circuit-breaker pause, but losses widened as foreign investors continued reducing exposure to technology shares.

Samsung And SK Hynix Lead Chip Selloff

Samsung Electronics fell as much as 13.4%, while SK Hynix dropped as much as 14%. The two memory-chip producers account for nearly half of the KOSPI’s weighting, magnifying the effect of their declines across the broader index.

SK Hynix’s U.S.-listed shares closed at $143.02 on Monday, falling below their $149 initial public offering price for the first time. The Seoul-listed stock had already suffered a record 15.4% decline earlier in July as investors unwound positions accumulated during its rapid AI-driven rally.

Tuesday’s decline followed another 10% KOSPI collapse that exposed leverage across Korean chip stocks in June. Retail demand for leveraged Samsung and SK Hynix products has amplified price swings as falling shares force funds and traders to reduce exposure.

China Competition Deepens AI Concerns

The selling spread across Asian semiconductor markets after Nvidia fell nearly 5% on Wall Street and investors questioned the financing behind large AI infrastructure projects.

Reports that Nvidia could provide a roughly $250 billion financial backstop for an OpenAI data-centre development added to concerns that chip suppliers may be helping finance the customers purchasing their hardware.

China’s ChangXin Memory Technologies also surged during its Shanghai debut after raising at least $8.6 billion. Investors focused on the company’s ability to expand production and compete with Samsung and SK Hynix in memory chips rather than its current earnings. Reports of progress on domestically produced deep-ultraviolet lithography equipment added pressure to Korean manufacturers.