South Korea's KOSPI Plunges 6.49% as Chip Selloff Triggers Trading Halt and Wipes Out Prior Day's Rally

SEOUL — South Korea's benchmark KOSPI index tumbled 6.49% on Thursday, falling 472.44 points to 6,811.97 by mid-afternoon, as a steep overnight selloff in U.S. semiconductor stocks erased the prior session's sharp rally and triggered another automatic trading halt in one of the most volatile years on record for Korean equities.

The index opened at 6,960.50, down 4.45% from Wednesday's close, and losses deepened through the morning. At 9:10:26 a.m. local time, the Korea Exchange activated a sell-side sidecar — a five-minute suspension of program sell orders — after KOSPI 200 futures fell more than 5% to 1,104.40. It was the 37th such trading curb triggered on the KOSPI so far this year, a pace that has already pushed the combined number of buy- and sell-side halts past the annual record of 26 set during the 2008 global financial crisis. By the time the halt lifted, the index had fallen as low as roughly 6,753 before paring some losses into the afternoon session.

The rout came just one day after the KOSPI staged a sharp rebound, surging more than 6% to close at 7,284.41 and reclaiming the 7,000-point level for the first time in three trading sessions. Foreign investors had poured a net 2.33 trillion won into the market Wednesday, the fourth-largest single-day foreign buying spree of the year. Thursday's reversal wiped out those gains almost entirely.

The selloff was led by South Korea's two largest companies. Samsung Electronics fell as much as 9% during the session before settling to a decline in the high single digits, while SK Hynix, the world's largest producer of high-bandwidth memory chips used in artificial intelligence systems, dropped more than 10%, reversing most of an 8% rally from the previous day. SK Square, SK Hynix's largest shareholder, tumbled more than 12%, and Samsung Electro-Mechanics fell nearly 10%. SK Hynix's American depositary receipts, which began trading on the Nasdaq earlier this month, fell 9% overnight to close at $176.46.

The declines tracked a broader pullback in U.S. chip stocks Wednesday, even as major American indexes rose overall. The Philadelphia Semiconductor Index fell 2.08% to 12,398.89 despite gains elsewhere on Wall Street, as investors rotated out of high-flying AI and memory names. Micron Technology sank roughly 8%, Marvell Technology dropped 7.27%, Intel fell 4.43% and Advanced Micro Devices lost 3.46%. The VanEck Semiconductor ETF declined 1.6%.

Kim Yu-mi, an analyst at Kiwoom Securities, said the domestic pullback reflected investors giving back part of the prior day's semiconductor-driven gains in response to the drop in U.S. chip shares. She said recent highfliers in artificial intelligence and semiconductors were seeing profit-taking, with buying interest instead moving toward major U.S. platform companies such as Apple, Alphabet and Amazon.

The sector breakdown on the KOSPI reflected the concentration of the selloff in technology and manufacturing. The electrical and electronics sector fell 7.95%, manufacturing dropped 6.3%, medical and precision instruments declined 4.44%, and securities and financial shares each fell roughly 3%. Telecommunications, textiles and food and beverage stocks were among the few sectors to post gains, rising between 1.5% and 3.6%. The tech-heavy KOSDAQ index also declined, falling nearly 3% to trade around 804.

By investor type, foreign investors and institutions were net sellers on the main board, while individual retail investors were the only net buyers, purchasing a net 212.2 billion won worth of shares even as the broader market slid.

The volatility was not confined to South Korea. Japan's Nikkei 225 fell more than 2%, with chip-equipment makers Advantest and Tokyo Electron both down sharply and SoftBank Group sliding nearly 7%. Kioxia, Japan's largest memory chipmaker, dropped more than 7%. The regional selloff underscored how closely Asian markets have become tied to swings in U.S. semiconductor sentiment amid the continuing global buildout of artificial intelligence infrastructure.

Thursday's decline is the latest swing in what has become an extraordinary year for the KOSPI. The index hit an all-time high of 9,385.59 on June 19 before falling into a technical bear market, dropping more than 25% from that peak within weeks amid repeated single-session swings of 5% to 10%. Despite the turbulence, the index remains up sharply for the year overall, driven by a surge in valuations tied to South Korea's expanding role in global memory-chip production for AI data centers. Samsung Electronics and SK Hynix together now account for roughly half of the KOSPI's total market weight, up from about a quarter at the end of last year, reflecting how heavily the index's fortunes now hinge on the two chipmakers' performance.

South Korean regulators have taken notice of the swings. Financial authorities have in recent sessions weighed measures targeting single-stock leveraged exchange-traded funds tied to Samsung Electronics and SK Hynix, which have amplified price movements in both directions. Officials have also flagged the risk that further interest rate increases could add to market volatility, ordering a broader review of risks facing companies and vulnerable borrowers.

The turbulence comes even as Korea's chipmakers continue to announce large-scale expansion plans tied to AI demand. SK Hynix has outlined tens of trillions of won in planned investment in domestic manufacturing capacity, including new fabrication facilities aimed at meeting demand for high-bandwidth memory and enterprise storage chips, while Samsung Electronics has moved to expand its own next-generation memory production.

For now, traders in Seoul said the market remains caught between two competing narratives: a structural rerating of Korean chipmakers' importance to the global AI buildout, and a level of daily volatility that has left even seasoned investors bracing for the next swing. With 37 sidecar activations already logged this year and the summer trading season still underway, market participants said further sharp moves in either direction should not be ruled out.