KOSPI falls 7.89% as AI capacity concerns hit chip stocks

Samsung, SK hynix lead losses; Apple chip talks add pressure

The Korea Exchange activated a sell-side sidecar for the KOSPI at about 9:07 a.m., halting program trading for five minutes after the KOSPI 200 Futures index dropped 5% or more for at least one minute.

Investor sentiment toward semiconductor stocks weakened after media reports said U.S. tech giant Meta Platforms was considering selling access to its artificial intelligence computing infrastructure, fueling concerns that the company may have built more AI capacity than it currently needs.

“Semiconductor stocks came under pressure after reports that Meta could enter the cloud infrastructure business,” Lee Kyoung-min, an analyst at Daishin Securities, said. “Reports that Apple is exploring chip sourcing from Chinese semiconductor companies also raised concerns that increased supply could ease supply bottlenecks and weaken chip pricing.”

Market bellwether Samsung Electronics shed 9.06% to 286,000 won, while chip giant SK hynix tumbled 14.57% to 2.19 million won. AI investment firm SK Square sank 13.2% to 1.52 million won, and chip components maker Samsung Electro-Mechanics retreated 12.65% to 1.93 million won.

Power equipment shares also lost ground as expectations for further expansion of AI infrastructure investment weakened. LS Electric lost 10.25% to 236,500 won, while HD Hyundai Electric fell 4.25% to 969,000 won.

Trade volume reached 499.85 million shares worth 48.86 trillion won (US$31.44 billion). Decliners outnumbered winners 614 to 279. Foreign investors sold a net 4.37 trillion won and institutions sold a net 2.07 trillion won, while individuals bought a net 6.26 trillion won.

The Korean won weakened, quoted at 1,555.8 won per U.S. dollar as of 3:30 p.m., down 0.9 won from the previous session.

U.S. stocks retreated overnight. The S&P 500 slipped 0.2%, while the tech-heavy Nasdaq 100 fell 1.5%. The Philadelphia Semiconductor Index, a key gauge of chip stocks, tumbled 6.3%.

Federal Reserve Chair Kevin Warsh said inflation expectations and inflation risks have eased in recent weeks, bolstering hopes for a delay in an interest rate hike.

Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasurys fell 4.4 basis points to 3.747%, and the return on the benchmark five-year government bonds lost 4.7 basis points to 3.981%.