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By Huileng Tan You're currently following this author! Click to unsubscribe from email alerts. The Kospi extended its second-half slide as concerns over the AI trade continued to mount.
Jung Yeon-je/AFP/Getty Images South Korea's stock market plunged on Tuesday as investors found a new reason to worry about the AI trade. The benchmark Kospi index fell more than 7% intraday to its lowest level since July 31, extending a dramatic reversal for what was once the world's hottest AI-fueled stock market. AI chip heavyweights Samsung Electronics and SK Hynix led the losses, falling 9% and 10%, respectively, by midday.
The weakness spread across Asia, with Japan's Nikkei and Taiwan's chip-heavy Taiex both falling around 3%. The declines followed another weak session for US semiconductor stocks overnight, including Micron. Investors were weighing a growing list of concerns about the AI trade, from rising Chinese competition to questions over how the industry's massive infrastructure buildout will be financed.
"The latest catalyst has been further evidence of China's growing ambitions across the AI ecosystem," Chris Weston, the head of research at Pepperstone, wrote in a note Tuesday. Weston pointed to Chinese memory-chip maker CXMT, which said it had made progress in developing technology that could pack more data onto memory chips and that it plans to introduce a new server-memory product by year-end. CXMT has yet to demonstrate it can manufacture the technology at scale, and the announcement does not immediately challenge South Korea's lead in high-bandwidth memory chips used in AI accelerators.
But it has added to investor concerns over how long memory makers can maintain their pricing power. The selloff marks another setback for the Kospi, which was the world's best-performing major stock index in the first half of 2026 before tumbling in the second half as investors shifted toward other parts of the AI hardware supply chain, including Taiwan. Adding to those concerns, Broadcom CEO Hock Tan warned Monday that capital, rather than chips or electricity, could become the biggest constraint on the AI industry's growth.
Together, the developments suggest investors are looking beyond AI demand alone. They're also scrutinizing pricing power and margins. China's ability to produce increasingly competitive technology at lower costs is "challenging established assumptions around market share, pricing power and the durability of margins," Weston wrote.
Read next Huileng Tan You're currently following this author! Click to unsubscribe from email alerts. Huileng Tan is a senior reporter based in Singapore, covering markets, the global economy, commodities, and investing.
Her reporting focuses on how shifts in money, demographics, technology, and policy are reshaping businesses, wealth, and everyday life around the world. Since joining Business Insider in 2021, she has covered everything from commodity booms and investor trends to China's economy, the AI trade, and the forces driving global markets. Before joining Business Insider, she reported for CNBC, Dow Jones, ICIS, and The Wall Street Journal.
Reach her at htan@businessinsider.com . Markets AI Tech More South Korea Stocks Stock Market
Source: Business Insider
