South Korea's benchmark index suffered its worst session in months as Samsung Electronics and SK Hynix led a broad selloff. The decline was triggered by reports of Chinese advances in chipmaking equipment and a blockbuster debut for domestic memory chipmaker CXMT.
South Korea's KOSPI index tumbled 11% to 6,012.68 on Tuesday as a selloff in semiconductor stocks deepened on fears that Chinese chipmaking advances threaten global leaders.
"We believe the market was likely spooked by the progress of China's chipmaking equipment capabilities, and was worried that this progress would threaten the competitive position of global chipmaking and chip equipment leaders," said Jing Jie Yu, equity analyst at Morningstar. He added that the selloff appeared "largely a knee-jerk reaction and overdone."
Samsung Electronics sank 13.1% and SK Hynix shed 13.5%, dragging the benchmark to its lowest level since April. The selloff extended across Asia, with Japan's Nikkei 225 falling 4.3% to 62,127.57 and Taiwan's Taiex skidding 4.7%, as Taiwan Semiconductor Manufacturing Co. dropped 3%. Hong Kong's Hang Seng was nearly unchanged at 25,196.42, while the Shanghai Composite lost 1.4% to 3,805.06. Australia's S&P/ASX 200 bucked the trend, gaining 0.4% to 8,932.90.
The rout was triggered by a report that China has begun mass production of homegrown deep ultraviolet chipmaking tools, threatening the competitive moat of established players. That followed a 466% surge in Chinese memory chipmaker CXMT on its Shanghai debut Monday, where it raised at least $8.6 billion. SK Hynix's US-traded shares fell below their $149 IPO price to close at $143, a stark reversal for a listing that debuted earlier this month.
Trading on the KOSPI was temporarily halted as the selloff accelerated. The broader tech rout also hit US markets, where the Nasdaq composite edged 0.2% lower even as the S&P 500 gained less than 0.1%. In the US, Nvidia fell 5%, AMD declined 5.2% and Micron Technology lost 2.3%. NVIDIA's credit default swap costs spiked to record levels as markets priced in financing risk tied to the $250 billion guarantee for OpenAI's computing leases, according to a report.
In currency markets, the dollar fell to 163.71 yen from 163.75. Oil prices extended declines, with Brent crude falling 0.5% to $85.48 a barrel and US benchmark crude losing 0.4% to $82.25, as progress toward US-Iran negotiations eased supply concerns. Brent had traded at approximately $72 before the start of the Iran war in late February.
The selloff raises questions about the durability of the AI-driven semiconductor rally, which has propelled stocks like Nvidia and SK Hynix to multiyear highs. With Chinese competitors advancing rapidly and financing risks mounting for large-scale AI projects, investors are reassessing the concentration risk in a trade that has dominated equity markets for three consecutive years.
This article is for informational purposes only and does not constitute investment advice.
