AI chip selloff hands Kospi its worst two-day drop ever
Seoul's benchmark fell about 6% on Wednesday after a 10.84% Tuesday collapse, as SK Hynix missed estimates and China's first domestic DUV tools entered service.
What happened
South Korea's Kospi closed Wednesday at 5,663.24, down 360.42 points or roughly 6%, extending a two-day decline of more than 12% — the steepest back-to-back fall in the index's history. Tuesday's session had already ended with a 10.84% drop to 6,023.66 after the Korea Exchange triggered a market-wide circuit breaker, with Samsung Electronics down 13.39% and SK Hynix down 14.65%. The Kospi's July loss now stands near 29%, exceeding the 27% monthly plunge recorded during the Asian financial crisis in October 1997.
The immediate catalyst on Wednesday was SK Hynix's second-quarter report. The memory maker posted revenue of 79.3 trillion won and operating profit of 60.54 trillion won — a 557% year-on-year jump, and a record — but both figures landed roughly 5% to 7% below consensus compiled by LSEG, with commodity DRAM price gains slowing and profit heavily concentrated in high-bandwidth memory. Shares fell more than 9% despite management pushing back on the idea that AI demand is cooling.
The China trigger
The deeper repricing began a day earlier, when a Shanghai state-backed toolmaker delivered China's first domestically produced immersion deep-ultraviolet lithography systems into service at SMIC and ChangXin Memory Technologies. CXMT's roughly $8.6 billion Hong Kong listing then debuted at a valuation above Intel's, crystallising fears of a DRAM oversupply cycle driven by subsidised Chinese capacity. Analysts in Seoul cautioned that the lithography milestone is symbolic rather than material for now — five units this year and about 20 planned for 2027, against ASML's annual output — but the market traded the signal, not the volume.
The unwind spread across the region: Japan's Nikkei 225 fell 3.95% to 62,364.92 on Tuesday, with Kioxia down 18.33% and SoftBank Group off 4.43%.
Why it matters
Memory pricing is the hinge on which AI datacentre economics turn. If investors now believe Chinese suppliers can compress HBM and DRAM margins on a multi-year horizon — and that even 557% profit growth is not enough to clear expectations — the cost of capital for the entire AI buildout shifts. That question is being answered in Asian trading hours, not on Wall Street.