Samsung is crucial to South Korea's economic health
South Korea’s KOSPI Falls More Than 7 Percent as Chip Stocks Lead Global Tech Sell-Off AFP / Jung Yeon-je

SEOUL — South Korea's benchmark KOSPI plunged more than 7 percent Thursday, extending a multi-session decline as technology shares fell sharply after hotter-than-expected U.S. inflation data and fresh doubts about returns on artificial-intelligence investments.

The index traded near 5,539 in late-morning dealings, down roughly 470 points, or 7.8 percent. It opened more than 5 percent lower and triggered a sell-side sidecar mechanism early in the session, temporarily suspending program sell orders. The drop followed a sixth consecutive losing session Wednesday, when the index closed just above 6,000.

Samsung Electronics and SK Hynix, the two heaviest weights in the index, led the decline, falling about 8 percent and more than 10 percent, respectively. Other AI-linked names also declined. Foreign investors remained net sellers. The Korean won weakened against the dollar.

The sell-off tracked overnight losses on Wall Street, where the Nasdaq Composite fell nearly 2 percent and the S&P 500 dropped more than 1 percent. U.S. consumer prices rose 0.6 percent in September, bringing the annual rate to 3.7 percent, above the 3.6 percent economists had expected. The reading reinforced expectations that the Federal Reserve could keep interest rates higher for longer, pressuring growth stocks that have driven the recent AI rally.

Investors have also grown more cautious about the pace and profitability of AI-related capital spending. Concerns over funding needs at some AI infrastructure companies and competition in memory chips have weighed on Korean semiconductor makers, which supply a large share of the global market. The KOSPI has fallen more than 40 percent from its record high set in June.

No specific company announcements drove Thursday's move. Analysts described the session as a continuation of risk-off trading concentrated in high-beta technology shares. Other Asian markets also declined, with Japan's Nikkei falling nearly 4 percent. The Korea Exchange has not issued further circuit-breaker measures beyond the sidecar. Trading remained open at the time of writing.