South Korean Stock Market Plummets as Chipmakers Face Selling Pressure Over AI Competition Concerns

South Korea’s benchmark Kospi index experienced a sharp decline Tuesday, dropping 10.5% to 6,051.19 as investors aggressively sold shares in the nation’s chipmaking sector. The index reached its lowest point since April, triggering a temporary trading halt as major semiconductor manufacturers posted significant losses.

Samsung Electronics shares fell 12% while SK Hynix declined 12.7%, reflecting widespread concern among investors about the future trajectory of artificial intelligence-driven market gains. Market analysts attributed the selloff primarily to growing apprehension that emerging Chinese AI startups and chipmakers could erode the competitive advantages that global semiconductor companies have enjoyed during the recent AI boom.

A dramatic 466% surge in Chinese chipmaker CXMT’s stock price during its Monday debut on Shanghai’s STAR exchange amplified these anxieties. The company raised a minimum of $8.6 billion through its initial public offering, demonstrating significant investor appetite for Chinese semiconductor alternatives.

Weakness spread across most Asian markets during the session. Tokyo’s Nikkei 225 declined 4% to 62,350.18, while Taiwan’s Taiex fell 3.9%. Hong Kong’s Hang Seng edged down 0.1% to 25,178.21, and Shanghai’s Composite index lost 1% to 3,820.52, though Australia’s S&P/ASX 200 bucked the trend with a 0.6% gain to 8,944.40.

Crude oil prices extended declines as U.S. and Iranian officials refrained from military actions for a third consecutive day. International Brent crude fell 0.8% to $85.16 per barrel, while U.S. benchmark crude lost 0.9% to $81.86 per barrel, with Middle Eastern mediators reportedly making progress in negotiations.

On Wall Street, equities closed mixed Monday, with the S&P 500 rising less than 0.1% and the Dow Jones Industrial Average gaining 0.5%. The Nasdaq composite fell 0.2%, marking its fourth consecutive decline.