South Korea's Kospi Slumps on Selloff in Chip Stocks — Update

By Kwanwoo Jun

South Korean stocks slumped, dragged by a selloff in semiconductor shares that triggered a temporary trading halt to curb volatility in nearly two months.

Concerns about intensifying competition from Chinese chip makers, including ChangXin Memory Technologies, known as CXMT, weighed on South Korean chip stocks, tracking declines overnight by their U.S. peers.

"AI and technology stocks, including memory chip makers, are trading lower due to advancements in DRAM technology by China's CXMT," said LS Securities analyst Kim Yun-jeong in a note.

Over the weekend, CXMT unveiled a new chip structure with around a 30% reduced cell area, and plans to debut a product with the new structure by the end of 2026.

The benchmark Kospi fell more than 7% early Tuesday, dipping below the 6000 mark for the first time since late July, before it pared some of its losses. The index closed down 5.5% at 6035.35.

The sharp drop early in the session prompted the Korea Exchange to briefly suspend trading to curb excessive volatility, the first such halt since the markets were roiled in June and July partly by the unwinding of overleveraged retail investors' bets on tech stocks.

Losses were led by Samsung Electronics and SK Hynix, the world's two biggest memory-chip makers, whose combined market capitalization accounts for nearly half of the Kospi's total market value. Samsung Electronics and SK Hynix fell 7.4% and 10%, respectively, their fifth consecutive session of losses.

The chip-driven retreat in the Kospi came amid a broader global selloff in chip stocks, with the Philadelphia Semiconductor Index falling 2.7% overnight.

The retreat, despite elevated profit estimates for semiconductor companies amid the artificial-intelligence boom, may partly reflect investors' skepticism about the sustainability of earnings, said KB Securities analysts E.T. Lee and D.E. Lee.

"Investors still appear to view semiconductors as a cyclical industry and remain skeptical about the sector's ability to generate sustained earnings," they wrote in a research note Tuesday.

Rising investment in AI infrastructure and strong demand for advanced memory chips are keeping semiconductor supply tight and prices elevated.

While bottlenecks can drive a surge in profits during boom periods, their eventual easing can lead to excess inventory and overinvestment, the KB Securities analysts said, adding that similar patterns had emerged in sectors such as diagnostic kits, masks, toilet paper and container shipping during the pandemic.

Foreign investors appeared more cautious than retail and institutional investors in Seoul trading on Tuesday. Offshore investors remained heavy net sellers, outweighing buying by local investors.

Continued foreign selling, particularly of large-cap semiconductor stocks, amid a lack of buying support, is adding to downward pressure on stocks, as they are reducing exposure to riskier assets in the Korean market, Samsung Securities said in a report.

Write to Kwanwoo Jun at kwanwoo.jun@wsj.com

Corrections & Amplifications

This article was corrected at 0825 GMT to reflect the Korea Exchange briefly suspended trading for the first time since August. The original version incorrectly said it was the first trading halt since July in the lead paragraph.

(END) Dow Jones Newswires

October 13, 2026 03:40 ET (07:40 GMT)