Kospi Plunges 10.5% as Samsung, SK Hynix Shares Tumble on AI Concerns

South Korea’s benchmark Kospi index plunged more than 10% on Tuesday, dragged down by heavy selling in major chipmakers amid growing concerns over the sustainability of the artificial intelligence-driven market rally.

The Kospi fell 10.5% to 6,051.19 by midday, touching its lowest level since April and triggering a temporary halt in trading. Shares of Samsung Electronics tumbled around 12%, while SK Hynix declined 12.7%, reflecting heightened investor anxiety over the semiconductor sector.

Analysts attributed the sell-off partly to concerns that intensifying competition from Chinese AI startups and chipmakers could challenge the earnings prospects of global technology companies that have benefited significantly from the AI boom.

The sharp debut of Chinese chipmaker ChangXin Memory Technologies (CXMT) further fueled those concerns. CXMT’s shares surged 466% on their first trading day on Monday, following an initial public offering that raised at least $8.6 billion on Shanghai’s technology-focused STAR Market.

The broader Asian market also came under pressure. Japan’s Nikkei 225 dropped 4%, while Taiwan’s Taiex declined 3.9%. Hong Kong’s Hang Seng slipped 0.1% and the Shanghai Composite fell 1%. Australia’s S&P/ASX 200, however, bucked the regional trend, gaining 0.6%.

Meanwhile, oil prices extended their decline as the US and Iran avoided attacks for a third consecutive day, with officials indicating that mediators had made progress toward reviving negotiations. Brent crude fell 0.8% to $85.16 a barrel, while US benchmark crude declined 0.9% to $81.86.

On Wall Street, the S&P 500 edged up less than 0.1% and the Dow Jones Industrial Average gained 0.5%. The Nasdaq Composite, however, fell 0.2%, marking its fourth consecutive decline.