South Korean chip-making giants Samsung Electronics and SK Hynix suffered another sharp sell-off on Thursday, reversing the previous day’s rebound and underscoring how crowded AI trades and leveraged positioning are turning routine sentiment shifts into violent market moves. SK Hynix plunged as much as 9.4%, Samsung lost nearly 6%, and the benchmark Kospi index slid over 4.5% in Seoul trading.
The immediate trigger came from Wall Street, where the Nasdaq snapped a winning streak after earnings from AMD and SpaceX failed to satisfy elevated investor expectations. AMD beat revenue and profit forecasts but disappointed with a flat gross margin outlook, while SpaceX’s heavy capital spending revived concerns over the sustainability of AI infrastructure investments. That weakness rippled through Asian tech, with Japan’s Kioxia and Tokyo Electron also falling sharply.
Leverage played a central role in exaggerating the move. Goldman Sachs noted that assets in Korean leveraged ETFs have nearly halved from a June peak, and retail margin loans have contracted, yet the unwinding process continues to generate outsized volatility. Analysts at Saxo and Citi described a cycle where forced selling by leveraged funds amplifies declines, while one-sided short positioning can spark violent short-covering rallies—exactly the pattern seen between Wednesday’s surge and Thursday’s plunge.
Despite the turmoil, Goldman Sachs remains constructive on the memory cycle, citing AI-driven demand and potential shortages through 2030. However, the bank acknowledged growing investor unease over Big Tech capital spending and competitive risks. Even Samsung’s and SK Hynix’s pledges of stronger shareholder returns offered little defense against the global AI sentiment reversal, leaving Korea’s equity market highly susceptible to abrupt swings.
