South Korea's KOSPI drops 11%+, led by chip stocks, amid concerns over China's chipmaking progress and the AI spending boom; Samsung falls 11%+ and SK Hynix 12%

A selloff in semiconductor stocks deepened Tuesday, as signs of China's progress in advanced chipmaking weighed on global rivals …

Bloomberg 2026-07-28

Context & Ripple Effects

The latest selloff extends a sharp KOSPI retreat: earlier coverage recorded the index more than 20% below its June record, with Samsung and SK Hynix already under pressure over longer-term chip deal concerns in a prior KOSPI decline.

It also follows a broader AI-chip valuation reset, including a May pullback among US chip stocks after an AI-driven rally. This episode adds a new concern to that repricing: whether China’s chipmaking advances could alter the competitive assumptions embedded in leading Korean chip shares.

First-order effects

Samsung and SK Hynix absorb the immediate market repricing, falling more than 11% and 12%, respectively, while their heavy index weight deepens the KOSPI’s decline.
Investors are reassessing the durability of AI-related semiconductor demand and the competitive position of the Korean chip leaders at the same time.

Second-order effects

The move raises pressure on other AI-hardware and semiconductor names to demonstrate that demand, product positioning, and customer commitments can withstand a more competitive supply landscape.
Because Samsung and SK Hynix have repeatedly driven Korea’s tech-led market moves, as in the June KOSPI selloff, volatility in chip valuations can continue to transmit quickly to the broader local equity market.

Third-order effects

If China’s advanced-chip progress continues to narrow perceived technology gaps, AI-chip valuations may depend less on a single scarcity narrative and more on demonstrable execution, product differentiation, and customer demand.
The broader shift is toward a more cyclical and geopolitically contested AI-hardware market, where investment expectations can reset across memory, foundry, and adjacent infrastructure suppliers.

The trend: The AI infrastructure supercycle is entering a more discriminating phase in which competitive supply advances and confidence in spending growth jointly drive chip valuations.

Discussion

@teroterotero Tero Kuittinen on bluesky
Kospi down -9.4%.... 3.6% of Korean population getting margin calls. They converted their pension savings into 5x leveraged chip stock longs.
@macrocharts @macrocharts on x
Another overnight plunge and trading halt: -KOSPI is down 36% from its peak made just a month ago. …
@jimcramer Jim Cramer on x
Oil (good) v. Hynix (bad) ... split market...again
@bjmtweets Brian McCormick on x
This article published June 18th marked the top of $KOSPI The market peaked 2-3 days after, and has now crashed 33%
@jimcramer Jim Cramer on x
SK Hijinx really living up to its new moniker. Who are their shareholders? Send them to DraftKings for some investing lessons
@oddstats @oddstats on x
The KOSPI is now down -34% from all time highs. This is the furthest it has been down since ▪ The 4 lowest days of the 2022 crash ▪ The week of COVID ▪ 2009
@neilsethinew @neilsethinew on x
South Korea's benchmark Kospi fell nearly 11% Tuesday, its worst session since March …
@kevrgordon Kevin Gordon on x
The Korean stock market's max drawdown has now approached -33.9% ... only a couple percentage points away from being the worst since the COVID drawdown [image]
@cameron Cameron Winklevoss on x
The AI trade is over. A ton of capital is looking for a safe home. Time to rotate back into the hardest money in the universe: bitcoin and Zcash. [image]

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