South Korea’s benchmark KOSPI index tumbled 3.48 percent on Friday, closing at 5,730.74 after a wave of selling hit semiconductor stocks, as global investors grew increasingly anxious about whether massive spending on artificial intelligence will actually pay off, according to Yonhap and The Korea Herald.
- KOSPI closed at 5,730.74, down 206.92 points or 3.48 percent, after dropping as low as 5,599.42, according to Yonhap and The Korea Herald
- The Korea Exchange activated a sell-side sidecar shortly after 10 a.m., the first such halt in 11 trading sessions, The Korea Times reported
- SK hynix dropped 7.08 percent and Samsung Electronics fell 3.02 percent, per Yonhap
- Alphabet shares plunged more than 12 percent after third-quarter revenue of $127.58 billion came in below market expectations, Yonhap reported
- The Kosdaq index fell 3.83 percent to 724.38, and the Korean won strengthened against the US dollar, according to Korea Herald and Hankyoreh
What happened
The index opened nearly 3 percent lower and kept sliding, briefly touching 5,599.42 before paring some losses, Yonhap reported. The drop was steep enough to trigger a sell-side sidecar on the Korea Exchange shortly after 10 a.m. local time — a mechanism that temporarily halts program sell orders when KOSPI 200 futures fall 5 percent or more within a minute. The Korea Times noted this was the first such activation in 11 trading sessions.
Chip giants bore the brunt of the decline. SK hynix slid 7.08 percent and Samsung Electronics dropped 3.02 percent, Yonhap reported, dragging down the broader market given their outsized weight in the index. The tech-focused Kosdaq index also fell, closing down 3.83 percent at 724.38. Foreign investors were net sellers of Korean shares, while local institutions and individuals bought in, cushioning some of the day’s losses, according to Yonhap.
Why it matters
The rout traces back to Wall Street, where disappointing earnings from major US technology firms reignited doubts about the profitability of AI-related spending. Alphabet, Google’s parent company, saw its shares plunge more than 12 percent even though quarterly revenue rose 25 percent year-on-year to $127.58 billion — the growth simply fell short of what investors had been expecting, Yonhap reported. Amazon’s results and forward guidance also disappointed, drawing attention to the rising cost of building out AI infrastructure, The Korea Times noted.
Because Korean chipmakers supply the memory and processing components that power AI systems worldwide, any wobble in confidence about AI’s near-term payoff tends to ripple quickly into their stock prices. Analyst Kang Jin-hyuk, cited by both Yonhap and The Korea Times, said back-to-back earnings disappointments from big tech firms and chipmakers sparked selling across the entire AI supply chain.
Background
Friday’s slide happened against a backdrop of persistent questions about how long the current AI investment boom can continue without clear signs of matching revenue. Major technology companies have been pouring enormous sums into AI infrastructure, and markets have grown more sensitive to any earnings report that suggests those bets are not generating sufficient returns. South Korea’s stock market, heavily weighted toward semiconductor exporters, is particularly exposed to swings in sentiment around global tech and AI spending.
What to watch
Analysts quoted in Korean media offered differing read on what comes next. Kang Jin-hyuk, cited in a Hankyoreh report, suggested the drop may reflect concerns over investment costs and monetization speed rather than a fundamental erosion of AI’s growth prospects, leaving room for a technical rebound after the sharp decline. He also pointed to unresolved foreign investor caution as a factor that could keep selling and buying pressure in tension for a while.
Our read: the episode underscores how tightly linked Korean chip stocks have become to sentiment swings among a handful of US tech giants. Investors will likely watch upcoming earnings from major chipmakers and shifts in foreign fund flows for signs of whether this was a temporary correction or the start of a longer reassessment of AI-related valuations.
Frequently asked questions
Why did Korean stocks fall so sharply?
A sell-off in semiconductor shares, triggered by weak US tech earnings and renewed doubts about returns on AI investment, pulled the KOSPI down 3.48 percent, according to Yonhap.
Which Korean companies were hit hardest?
Chipmaker SK hynix sank 7.08 percent and Samsung Electronics fell 3.02 percent, per Yonhap, as both are closely tied to global AI-related semiconductor demand.
What triggered the US tech sell-off?
Alphabet's quarterly revenue missed market expectations despite 25 percent year-on-year growth, sending its shares down more than 12 percent and unsettling AI-linked stocks worldwide, Yonhap reported.
Sources
- The Korea Herald: Seoul shares dip over 3% on tech sell-off amid AI concerns
- The Hankyoreh: ‘알파벳 쇼크’에 국내 증시 출렁…코스피 3%대 하락 마감
- The Korea Times: KOSPI falls 3.48% as US tech earnings fuel AI investment concerns
- Yonhap News: (LEAD) Seoul shares dip over 3 pct on tech sell-off amid AI concerns
This article was prepared with AI assistance from the reports listed above and automatically checked against them. See About for how we work.