KOSPI Plunges 5.5% as Samsung and SK Hynix Crash — AI-Chip Panic Goes Global After Broadcom CEO's "Casino" Warning

South Korea's stock market suffered its worst day in nearly two months on Tuesday, as a global AI-chip panic went from a Wall Street worry to a full-blown Asian selloff. The benchmark KOSPI index plunged 5.46% to close at 6,035.35, barely holding the psychologically important 6,000 line after diving as low as 5,911.11 — a 7.41% intraday drop — earlier in the session.

The selloff was led by the country's two chip giants. Samsung Electronics fell roughly 7% and SK hynix dropped about 10%, their fifth straight session of losses. Together the two memory-chip makers account for nearly half of the KOSPI's total market value, so when they fall, the whole market falls with them.

Trading halted as foreigners dumped $3.4 billion of shares

The morning session was so violent that the Korea Exchange triggered a sell-side sidecar — a temporary halt on program sell orders designed to cool overheating — for the first time in roughly two months. Decliners outnumbered advancers by about 630 to 247.

Foreign investors were the sellers. They offloaded a net 4.53 trillion won (about US$3.4 billion) of KOSPI-listed shares, their heaviest selling since the July 28 rout, with SK hynix and Samsung the two most heavily sold stocks. Domestic retail investors bought a net 2.25 trillion won and institutions bought 1.69 trillion won, but their combined buying could not offset the foreign exit.

What triggered the panic: a Chinese chip breakthrough and a "casino" quote

There was no single catalyst — instead, two stories collided. Over the weekend, China's ChangXin Memory Technologies (CXMT) unveiled a new DRAM chip structure with roughly 30% reduced cell area, and said it plans a product using the design by the end of 2026. For investors in Samsung, SK hynix and Micron, that looked like a serious new competitor in the memory business.

Then came the quote that ricocheted around trading floors. Broadcom CEO Hock Tan said at an event in Singapore on Monday that many AI investors "have no clue what they are investing in," comparing them to gamblers in "a casino." Coming from the head of one of the world's biggest chip companies, the remark fed growing doubts about whether the AI spending boom — and the earnings it is supposed to produce — can last.

"There has been a big sell-off in tech overnight, seemingly on concerns over Chinese AI competition," Deutsche Bank analyst Jim Reid wrote, noting the KOSPI had just logged its worst two-day performance since July.

The panic went global — but Seoul took the hardest hit

The fear had already shown up on Wall Street: the PHLX Semiconductor Index dropped 2.7% on Monday. On Tuesday it spread across Asia. Tokyo's Nikkei 225 closed down 1.8%, China's CSI 300 slid 0.3%, while Hong Kong's Hang Seng bucked the trend with a 0.3% gain.

Seoul's pain was worse because of concentration. With Samsung and SK hynix making up so much of the index, a chip-sector wobble becomes a whole-market event. Tuesday's close leaves the KOSPI about 36% below its all-time intraday high of 9,385.59, set on June 19 this year at the peak of the AI rally.

What analysts are watching next

Analysts pointed to several overlapping worries: concerns over OpenAI's revenue and the sustainability of AI-driven earnings, the completion of local chipmakers' share buybacks, and the CXMT breakthrough. Investors now await the US consumer price index report due Wednesday for clues on the Federal Reserve's policy outlook ahead of its October rate-setting meeting.

For now, the message from Tuesday's session is that the AI trade is no longer a one-way bet. A Chinese competitor's advance and a chip CEO's blunt warning were enough to erase trillions of won in a single day — and to remind markets that even the defining investment story of the decade can reverse fast.

Sources

• Barron's — "KOSPI Slumps as U.S. AI Chip Panic Spreads" (barrons.com)
• Morningstar (Dow Jones) — "South Korea's Kospi Slumps on Selloff in Chip Stocks — Update" (morningstar.com)
• Korea JoongAng Daily — "Kospi plunges 5.5% as Samsung, SK hynix lead AI-driven tech sell-off" (koreajoongangdaily.com)
• Aju Press — "KOSPI plunges over 5% as foreign selloff batters chip giants" (ajupress.com)
• The Korea Herald Business — "Kospi barely holds 6,000 as Samsung Electronics, SK hynix tumble on China chip fears" (biz.heraldcorp.com)