South Korean stock markets experienced sharp losses after a global sell-off in semiconductor and technology stocks, as investors responded to political changes in the United States that may impact demand in artificial intelligence and data infrastructure.
The KOSPI index opened with an 8.55% loss on Friday, triggering an automatic 20-minute halt to trading after stocks dropped to 4,923.47—marking the first time in nine months the index fell below the 5,000-point threshold. This latest decline pushed the benchmark nearly 19% below its late October intraday high, with cumulative losses since the record high in June now approaching 48%.
Leading the declines were South Korea’s major memory chip companies: Samsung Electronics and SK Hynix both tumbled by more than 10% during the session. The two companies have been at the forefront of the KOSPI’s AI-driven surge earlier in the year and now face sharp reversals as valuations shift in response to policy uncertainty.
Both firms supply critical components to data centers and AI infrastructure, leaving them exposed should regulatory changes in the U.S. curtail expansion in these sectors. Their declines were compounded by unwinding positions in Korea-focused exchange-traded funds leveraging gains from the AI sector.
Several other blue-chip names in Seoul were also affected. LG Energy Solution saw a 4% decrease, Hyundai Motor dropped 6.9%, and Kia Corp fell 4%, amplifying pressures across the broader market.
The volatility traced back to investor concerns over the direction of U.S. policy, following a decisive Democratic victory in the midterm elections. Market participants worried this shift in Washington could result in additional hurdles for data-center projects and stricter oversight of AI development, clouding the outlook for global hardware suppliers.
In the United States, the Philadelphia Semiconductor Index closed 12.3% lower, with the NASDAQ Composite also registering its sharpest daily decline since April 2025. Weakness in U.S. trading spilled into Asian bourses, intensifying the regional sell-off.
A financial think tank leader in Seoul noted that the market may be responding more forcefully than warranted by the policy changes, but acknowledged that delays in AI infrastructure projects—including data centers—could result from heightened concerns among U.S. policymakers and local governments.
As a result, the focus now turns to whether regional equity markets can stabilize after the recent rout and how quickly clarity emerges regarding the new U.S. regulatory approach to AI and technology sectors.
