South Korea's Kospi sinks 7.4% as chip shares sell off on AI boom worries
Samsung Electronics fell 7.7% and SK Hynix 8.8% as investors weighed AI financing and Chinese memory-chip competition. Seoul's exchange triggered a sell-side sidecar at 9:48 local time to pause programmed sell orders.
Chip stocks drive the Asian sell-off
On Tuesday, 13 October 2026, South Korea's benchmark Kospi index fell 7.4% to 5,914.35, its lowest level since late July, according to AP. The index had reached an all-time high in June after crossing 9,000, lifted by the global artificial intelligence boom, and it now sits roughly a third below that peak. Samsung Electronics fell 7.7% and SK Hynix dropped 8.8%, and the two memory makers carry heavy weight in the index. In Japan, the Nikkei 225 slid 2.5% to 67,292.39 while the broader Topix lost 0.5%, with Tokyo Electron down 6.6%, SoftBank Group, an OpenAI investor, down 8%, and Kioxia Holdings down 13%. In Hong Kong the Hang Seng fell 1% to 24,033.51, and Taiwan's Taiex dropped 1.9%, pulled lower by a 1.6% fall in TSMC.
- Kospi
- -7.4 %
- Samsung Electronics
- -7.7 %
- SK Hynix
- -8.8 %
- Tokyo Electron
- -6.6 %
- SoftBank Group
- -8 %
- Nikkei 225
- -2.5 %
Chinese rivals and AI financing doubts
Investors are weighing two worries at once. Il Sole 24 Ore reported that recent progress by the Chinese memory-chip maker Cxmt could pose a growing challenge to Samsung Electronics, SK Hynix and Micron Technology, the largest memory-chip makers in the world. Speaking at an event in Singapore, Broadcom chief executive Hock Tan warned that finding funding could become a bigger problem than chip shortages, and he said many investors have little idea where they are putting their money, with expectations set almost as if they were in a casino. Large AI deals depend on borrowing at a time when higher interest rates raise the cost of that funding. The cancellation of the planned offering by Firmus Grid last week, a data center company backed by Nvidia, added to doubts about how long the boom can last. Tencent plans to issue bonds worth at least $4.5 billion to finance its large AI investments.
Wall Street and the Middle East backdrop
On Monday, 12 October, the S&P 500 slipped 0.1%, the Dow Jones Industrial Average rose 0.4% and the Nasdaq Composite fell 0.4%, while the Philadelphia Semiconductor Index dropped 2.7%. Nvidia lost 1.3%, Advanced Micro Devices 2.3%, Micron Technology 3.9% and Broadcom 1.9%. Oil prices also fell, with Brent crude down 1.4% at $105.20 a barrel, even as tensions in the Middle East continued to escalate. Handelsblatt reported that concern over an attack on a Saudi Arabian airport and a discussed energy ceasefire between Russia and Ukraine dampened appetite for risk in Asia. Nomura Securities strategist Maki Sawada explained why Japan's market was following the US chip selloff.
One can rightly claim that the Japanese stock market today is being influenced by the downtrend in US semiconductor stocks.
Seoul's sidecar and the week ahead
At 9:48 local time the Seoul exchange triggered a sell-side sidecar, which pauses programmed sell orders for five minutes once the Kospi 200 futures have been down 5% or more for at least one minute. Unlike a circuit breaker, regular trading continues during the pause. The exchange also temporarily suspended program trading on the Kospi, the first such halt since August.
- Kospi reaches an all-time high after crossing 9,000, lifted by the AI boom
- Wall Street ends mixed, with the Nasdaq Composite down 0.4% and the Philadelphia Semiconductor Index down 2.7%
- Sell-side sidecar triggered on the Seoul exchange, pausing programmed sell orders for five minutes
