South Korea's 10% plunge ignites global AI tech rout, Nasdaq loses $1 trillion

The selloff begins in Seoul

South Korea’s benchmark KOSPI index, the world’s best performer since early 2025, plunged 10% on Tuesday, its steepest single-day drop in years. The selloff was led by chip giants Samsung Electronics and SK Hynix, which had been among the biggest beneficiaries of the AI-driven demand for memory chips. The rout reflected growing unease that the rally fueled by artificial intelligence had run too far, too fast.

Wall Street catches the contagion

The selloff quickly spread to US markets, where the Philadelphia semiconductor index fell 7.9% and the Nasdaq Composite lost 2.2%, shedding nearly $1 trillion in value. Micron Technology, a top AI memory-chip play, tumbled 13%, while Nvidia dropped 4.1% to push its market cap below $5 trillion. Memory-chip makers SanDisk and Western Digital lost 14% and 8.5% respectively.

“The trade has been highly concentrated and flow-driven, which makes it vulnerable to relatively small shifts in sentiment. It doesn't appear to be closely tied to the fundamentals of the AI story, but rather to the heavy concentration and strong inflows into global tech over the past few months now starting to unwind.”

SanDisk14

Micron Technology13

Marvell9.4

Western Digital8.5

Qualcomm8

Nvidia4.1

SanDisk

14 % decline

Micron Technology

13 % decline

Marvell

9.4 % decline

Western Digital

8.5 % decline

Qualcomm

8 % decline

Nvidia

4.1 % decline

Data from the article text

Rebound and rotation

On Wednesday, Asian markets swung violently. South Korea’s KOSPI rebounded, gaining nearly 3% by late afternoon after a morning surge of 4% and a brief 2% drop. Samsung jumped 8% while SK Hynix added 1%. In contrast, Taiwan’s benchmark index fell more than 2% as Taiwan Semiconductor Manufacturing Co. slid 4%, reflecting ongoing nervousness in the sector.

Political stakes for the White House

The selloff threatens to undercut a pillar of President Trump’s economic narrative. Wall Street banks estimate the largest AI companies will spend over $700 billion on capital projects this year, and the Federal Reserve Bank of St. Louis says AI contributed nearly a full percentage point to real growth in the first three quarters of 2025. A sustained downturn in tech stocks could erode household wealth concentrated among high-income investors and dampen consumer spending.

“If something were to dent the confidence of that top 10 percent, that would have a ripple effect into the real economy.”

“We have more factories being built — and I mean car factories, AI factories, factories of every type — than we've ever had in the history of our country.”