KOSPI plunges 11% as Samsung, SK Hynix drag on China AI fears
South Korea's KOSPI plunged nearly 11% as Samsung and SK Hynix sold off on China AI fears and spending doubts; bitcoin slid about 2%.
In Brief
- South Korea’s KOSPI plunged nearly 11%, with CoinDesk citing a 10% drop to its lowest level since mid-April.
- Samsung Electronics and SK Hynix led the selloff as China’s AI progress stoked doubts about the spending boom.
- Bitcoin slid about 2% after the U.S. close, falling to roughly $63,200.
South Korea’s KOSPI crashed nearly 11% on Tuesday, with chip heavyweights Samsung Electronics and SK Hynix dragging the benchmark lower as investors questioned the durability of the AI spending boom.
AP News reported the index plunged nearly 11% on selling of chipmaking stocks, while CoinDesk put the drop at 10% to its lowest level since mid-April and said the KOSPI has now fallen 25% from its mid-June peak. The selloff spilled into crypto, with bitcoin sliding about 2% after the U.S. close.
The trigger was a double dose of bad news for the AI trade: signs of progress in China’s advanced chipmaking and fresh doubts about whether the capital-spending surge can continue. CoinDesk reported the index closed at its lowest level since mid-April, down 25% from its mid-June peak.
What drove the KOSPI plunge
The decline was concentrated in memory-chip names that powered South Korea’s rally. Techmeme, citing Bloomberg, said Samsung fell more than 11% and SK Hynix about 12%, with both among the market’s largest weights. The breadth of the drop showed how crowded the Korea-chip trade had become.
A Bloomberg gauge of semiconductor shares slumped 7.5%, its biggest drop since April 2025, as the report tied the move to circular funding and China competition fears. The worry is that Beijing’s advancing chipmaking narrows the moat that justified rich valuations for Korean memory makers, and the selloff also clouds Samsung’s planned $200 billion Broadcom chip deal with Broadcom.
Single-stock ETFs tied to the memory-chip makers have amplified the swings, pulling retail money into a boom-and-bust cycle that has sharpened market volatility. The pattern mirrors a broader pullback as funds rotate away from the AI trade, which Frontierbeat covered earlier this month.
Why bitcoin followed stocks lower
Bitcoin fell about 2.7% to roughly $63,200 after the U.S. close, down from nearly $65,000, according to CoinDesk. The move extended losses across major cryptocurrencies, dragging down ether, XRP and solana. CoinDesk noted bitcoin has a history of tracking equity-market volatility, though the link is uneven.
Analysts say bitcoin tends to track equities when stress is macro- and rates-driven, though Bitfinex argued the correlation is overstated when the shock is an earnings-and-capex debate specific to stocks. The risk-off cue from Seoul weighed on crypto sentiment ahead of the Federal Reserve’s rate decision, with Core PCE and GDP data due Thursday in what Nexo’s Dessislava Ianeva called the week’s highest-volatility window for rate repricing.
The drop fits a wider cooldown in mega-cap tech, including debate over Apple’s most-valuable-company standing after an Nvidia-led selloff. It also landed as the U.S. Senate shelved the CLARITY Act to prioritize a Russia sanctions bill, pushing any crypto-regulatory vote past the Aug. 8 recess.
FAQ
How much did the KOSPI fall?
The KOSPI plunged nearly 11% per AP News, with CoinDesk citing a 10% drop to its lowest level since mid-April and a 25% decline from its mid-June peak.
Why did Samsung and SK Hynix drop?
Both are heavyweight memory-chip makers; Techmeme cited Bloomberg figures of more than 11% for Samsung and about 12% for SK Hynix, as China’s chipmaking progress and AI-spending doubts hit the sector.
How much did bitcoin fall?
CoinDesk reported bitcoin slid about 2% after the U.S. close, falling roughly 2.7% to about $63,200 from nearly $65,000.
