South Korean equities suffered a sharp risk-off session on Thursday, with the benchmark Kospi plunging more than 5% and briefly sliding below 5,350 after opening near 5,580. The decline was driven by a concentrated selloff in semiconductor manufacturers, chip equipment suppliers and power infrastructure names, prompting a temporary suspension of program trading on the main exchange and a sell-side sidecar on the tech-heavy Kosdaq as it fell below the 700 mark.
Foreign investors led the selling, offloading nearly 2 trillion won—about $1.4 billion—on the main board alone. Samsung Electronics dropped roughly 8%, while SK Hynix fell more than 10%, according to initial reports. The two chip giants together account for about half of Kospi market capitalization, amplifying the benchmark's move. The weakness followed a more than 3% overnight drop in the Philadelphia Semiconductor Index, even as the broader U.S. stock market closed higher.
Investors attributed the selloff to Democratic victories in the U.S. midterm elections and concerns that tighter oversight of AI infrastructure projects—covering energy and water use, environmental impact and permitting—could delay data-center construction. For Samsung and SK Hynix, key suppliers of high-bandwidth memory used in AI accelerators, any slowdown in U.S. data-center buildouts could directly affect advanced memory chip demand. Mixed earnings from Qualcomm and Arm Holdings added to negative sentiment: Qualcomm reported handset chip revenue of $5.14 billion, down 26% and below expectations, while Arm's record revenue of $1.44 billion—up 27% year over year—failed to ease valuation concerns.
Beyond chips, defense stocks were among the hardest hit, with LIG Defense & Aerospace down 16%, Hanwha Systems off 11.45% and Hanwha Aerospace losing more than 8%. Still, the selling was not uniform: more than 400 Kospi stocks advanced after the sidecar was triggered, indicating sector rotation, according to Shinhan Securities analyst Kang Jin-hyuk. The Korean won weakened slightly, Japan's Nikkei 225 slipped about 1.86%, and China's Shanghai Composite edged lower, while Hong Kong's Hang Seng Index rose nearly 3%.
SK Hynix also faces a separate regulatory hurdle in the United States. Washington has held up approvals for American chipmaking equipment needed to expand production at its Dalian facility in China. The company reportedly argues that the added Chinese output would help finance its proposed NAND plants in Marcy, New York, an investment that could start around $45 billion and potentially reach $100 billion. Executives from SK Hynix subsidiary Solidigm have held nearly 10 meetings with Commerce Department officials since late August, but approval remains pending. Meanwhile, Samsung is preparing to use its second Taylor, Texas foundry to make base dies for HBM chips supplied to Nvidia and AMD, with construction expected to begin this month and mass production targeted for 2030, though Samsung has not officially confirmed the report.
