TLDR
- The KOSPI index plunged over 6% at Thursday’s opening bell, activating an automatic five-minute circuit breaker.
- Shares of Samsung Electronics and SK Hynix each tumbled approximately 10% following reports that new AI software could diminish memory chip requirements.
- Japanese chipmaker Kioxia plummeted more than 15%, pulling the Nikkei 225 index down by over 2%.
- Morningstar analysts increased fair value projections for Samsung and SK Hynix, highlighting robust AI demand coupled with constrained supply.
- Industry experts anticipate a wave of new memory production capacity will trigger a market correction in 2029-2030.
Thursday brought chaos to South Korean financial markets as plummeting semiconductor stocks forced an emergency trading suspension. The downturn quickly rippled through Asian markets, hammering Japanese chip manufacturers as well.
What Triggered the Semiconductor Selloff
The KOSPI index collapsed by more than 6% within minutes of the opening session, activating a sell-side circuit breaker that paused all trading for five minutes. Samsung Electronics saw its shares decline 7.3%, while SK Hynix experienced losses approaching 9%.
The dramatic decline followed reporting from The Information revealing that OpenAI had engineered new software capable of reducing AI inference computing needs by 50%. This sparked immediate concerns that technology companies could operate their AI systems with significantly fewer processors.
Adding to investor anxiety were reports that Meta Platforms intends to monetize surplus cloud infrastructure capacity. This development suggested companies might optimize existing hardware rather than purchasing additional chips.
Further pressure emerged from reports indicating Apple had entered negotiations to acquire memory components from sanctioned Chinese manufacturers, creating additional headwinds for established semiconductor suppliers.
Despite Thursday’s dramatic losses, SK Hynix shares remain up more than 200% year-to-date. Kioxia, now Japan’s highest-valued corporation, has surged approximately 600%. The KOSPI index itself has climbed nearly 83% throughout 2026.
IG market strategist Fabien Yip identified profit-taking as a primary catalyst behind Thursday’s sharp movements.
What Analysts Are Saying
Interestingly, just one day before the volatility, Morningstar upgraded its valuation targets for both Samsung and SK Hynix on Wednesday.
Morningstar equity analyst Jing Jie Yu characterized the ongoing memory semiconductor cycle as “tracking substantially stronger than expected,” emphasizing constrained supply availability, robust artificial intelligence demand, and extensive long-duration supply contracts.
However, Yu simultaneously cautioned about emerging medium-term risks. He projects that substantial increases in memory manufacturing capacity over the coming 24 months will likely precipitate a market downturn during 2029 and 2030, particularly as existing long-term pricing contracts reach expiration.
Thursday’s trading suspension represents just the latest in multiple circuit breaker events on the KOSPI throughout 2026. Major semiconductor stocks have generated substantial intraday volatility in the index consistently this year.
Yip predicted that market turbulence will likely intensify ahead of Thursday’s critical US nonfarm payrolls data release. He additionally noted that speculative short positioning in the Japanese yen has returned to July 2024 levels, which previously catalyzed a significant carry-trade reversal.
While artificial intelligence demand remains fundamentally strong, investors are increasingly questioning the sustainability of current semiconductor pricing dynamics.
