Korean Chip Stocks Tumble
KOSPI Dives 10% as AI Selloff Hits Samsung, SK Hynix; Circuit Breakers Triggered
Anonymous
Key Points
1
SpaceX stock weakness prompted a shift in investor focus to Micron Technology, with Micron's upcoming earnings viewed as potentially influential for Samsung Electronics and SK Hynix.
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June 8 marked the third time circuit breakers were triggered in 2026 for Korea's KOSPI, tied to a chip-driven rout after Broadcom's forecast and a broader global downturn.
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Even after the June 8 sell-off, the KOSPI's 2025 rally remained robust, up about 76% for the year and roughly 78% over the trailing 12 months.
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The won traded near a 17-year low of about 1,561.5 per dollar on June 5, prompting emergency meetings by South Korean authorities.
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The KOSPI had closed at a recent peak of 8,801.49 on June 2, and by June 8 was roughly 15% below that level, highlighting the sharp pullback from the rally.
South Korea's KOSPI index tumbled as much as 4.6% on June 23, with chip giants Samsung Electronics and SK Hynix each falling more than 5%, according to Reuters. Foreign investors dumped over 2 trillion won worth of stocks in a single session, even as retail investors stepped in to buy the dip.
The selloff is the latest blow in a brutal few weeks for Seoul's market. On June 8, the KOSPI plunged 8.3% — its worst single-day drop in years — triggering a 20-minute circuit breaker, CryptoBriefing reported. That marked the third time in 2026 that circuit breakers fired on the Korean exchange.
A 76% Rally Unravels in Weeks
To understand the crash, you have to start with the boom. The KOSPI surged roughly 76% in 2025, driven by global demand for AI chips and high-bandwidth memory, according to GuruFocus. By June 2, the index closed at a peak of 8,801.49. Just six days later, it had fallen about 15% from that high.
Analysts say the market was simply stretched too far. "After a 76% rally in 2025, the market was looking for a reason to sell," said Park Sang-hyun, an economist at Hi Investment & Securities. "Broadcom provided the excuse." When Broadcom issued a weak revenue forecast, it confirmed fears that the AI hardware boom was peaking — and Korean chip stocks bore the brunt.
Foreign Investors Flee for 21 Straight Sessions
Foreign institutional investors have been a persistent source of selling pressure. By June 8, they had posted net outflows for 21 consecutive sessions, according to CryptoBriefing. On June 23 alone, they sold more than 2 trillion won worth of KOSPI stocks. The South Korean won slid toward a 17-year low of 1,561.5 per dollar as of June 5, making KRW-denominated gains worth less in foreign currency terms.
South Korean authorities responded with emergency meetings between the Bank of Korea and the Ministry of Economy and Finance. A weaker won raises the cost of servicing foreign-denominated corporate debt. That risk is especially acute for smaller tech suppliers in Samsung and SK Hynix's supply chains. Meanwhile, domestic "Ant" investors — ordinary Korean retail traders — have been the only major buyers, absorbing much of the foreign selling.
Leveraged ETFs Draw Regulatory Scrutiny
Regulators are now pointing at leveraged ETFs as a key culprit in the wild swings. These funds must rebalance every day. When prices fall, they are forced to sell — which pushes prices down further. South Korea's Financial Supervisory Service is considering temporary limits on certain leveraged products, GuruFocus reported. Officials said they are "closely monitoring the concentration of retail capital in high-risk derivative products."
The concern is a feedback loop. Falling prices force leveraged ETFs to sell. That selling drives prices lower. That triggers more forced selling. Analysts say this dynamic likely amplified both the June 8 circuit-breaker crash and the June 23 intraday drop. The KOSPI opened June 23 at 9,083.54 — already down 31 points from the prior session — before losing another 4.6% during the day.
Micron Earnings Seen as the Next Big Test
Investor attention is now turning to Micron Technology. Analysts at Goldman Sachs say Micron's upcoming earnings report will be the key signal for where Samsung Electronics and SK Hynix go next. If Micron shows strong demand for memory chips, it could stabilize the Korean names. A miss, however, could deepen the selloff across the entire sector.
On June 23, Asian markets were mixed. New Zealand, Australia, and Singapore posted modest gains. But the KOSPI was the weakest major index in the region, sliding roughly 3.95%, according to GuruFocus. The divergence suggests this is a chip-sector rout, not a broader Asian financial crisis. Still, with the KOSPI still up around 78% over the trailing 12 months, the question is how much further the correction has to run.
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