South Korea’s benchmark Kospi index suffered one of its sharpest declines in years on Thursday, closing down 655.32 points, or 7.89%, at 7,648.09, after a broad selloff in global semiconductor stocks triggered panic selling across Asia. The steep decline pushed the index back below the 8,000 level and briefly activated an automatic trading halt on the Korea Exchange, underscoring how heavily the country’s stock market has become tied to the fortunes of its semiconductor industry.

Leading the losses were South Korea’s two largest chipmakers. SK Hynix plunged 14.57%, while Samsung Electronics fell 9.06%, wiping billions of dollars off their combined market value in a single trading session. Together, the two companies now account for roughly half of the Kospi’s total weighting, meaning sharp swings in either stock can significantly move the entire market.

The selling began overnight in the United States after another wave of weakness swept through technology and semiconductor shares on Wall Street. Investors were particularly unsettled after Meta Platforms announced plans to enter the cloud-computing leasing business by renting excess artificial-intelligence computing capacity to outside customers. The move raised fresh questions about whether the largest technology companies may begin slowing or reshaping the massive spending that has fueled the AI infrastructure boom.

The concerns quickly spread throughout the semiconductor sector. In U.S. trading, memory-chip makers including Micron Technology and SanDisk each lost about 10%, setting the tone for heavy selling when Asian markets opened Thursday.

South Korea felt the impact more than most markets because of the extraordinary concentration of its benchmark index. According to Zavier Wong, a market analyst at eToro, Samsung Electronics and SK Hynix together now represent approximately 50% of the Kospi’s total market capitalization, nearly double their combined weighting from the end of last year. That concentration has made South Korea’s stock market increasingly dependent on the performance of the global semiconductor industry and, more recently, on investor sentiment surrounding artificial intelligence.

Foreign investors led Thursday’s selling, unloading more than 5 trillion won—approximately $3.7 billion—worth of South Korean equities. Domestic retail investors stepped in aggressively to purchase shares, helping absorb some of the selling pressure, but were unable to prevent the broader market from posting one of its worst declines in recent memory. During the afternoon session, exchange officials activated a sidecar, an automatic mechanism that temporarily pauses certain program trades during periods of extreme volatility.

The losses spread quickly throughout Asia. In Japan, memory-chip producer Kioxia, now one of the country’s largest technology companies, fell more than 13%, helping drag the Nikkei 225 down 2.47%. South Korea’s technology-heavy Kosdaq index also suffered heavy losses, falling 6.74%.

Despite the sharp decline, several market analysts argued that Thursday’s rout appeared driven more by profit-taking after months of extraordinary gains than by any deterioration in the industry’s long-term fundamentals.

Fabien Yip, market analyst at IG, said many investors chose to lock in profits following the remarkable rally semiconductor shares have enjoyed during the global AI boom. While valuations have risen dramatically, demand for advanced memory chips used in artificial-intelligence servers continues to remain strong.

In fact, South Korea’s semiconductor industry continues to invest aggressively in future production. Samsung Electronics and SK Hynix together are planning to invest an estimated $520 billion in four new semiconductor manufacturing complexes across South Korea over the coming years. On Thursday, SK Hynix Chief Executive Kwak Noh-jung reaffirmed the company’s plans to invest approximately 100 trillion won, or about $64 billion, in domestic facilities, including construction of a major new fabrication plant expected to begin next year.

Research firms also remain optimistic about the industry’s longer-term outlook. Just one day before the selloff, Morningstar raised its fair-value estimates for both Samsung Electronics and SK Hynix. Analyst Jing Jie Yu said the current memory-chip cycle continues to outperform earlier expectations, citing tight supply conditions, resilient demand for AI hardware, and growing numbers of long-term supply agreements between chip manufacturers and major technology companies.

For South Korea, where semiconductors remain the country’s largest export industry, Thursday’s market decline served as another reminder of how closely the nation’s economy has become linked to the global race to build artificial intelligence infrastructure. While investor sentiment can change quickly, the country’s largest technology companies remain central players in one of the world’s fastest-growing industries.

JBizNews Desk | Seoul

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