South Korea’s KOSPI index plunged 10.84% to close at 6,023.66 on Tuesday, marking the second-largest single-day decline in the benchmark’s history and triggering automatic trading halts as concerns over China’s advances in chipmaking and the sustainability of artificial intelligence spending swept through Asian markets.
The Korea Exchange halted cash trading for 20 minutes after the index fell through the 8% circuit-breaker threshold, suspending program trades as futures plummeted in the opening minutes of the session. Samsung Electronics and SK Hynix, the two largest components of the KOSPI, each tumbled more than 13%, dragging the broader market lower as chipmaker stocks faced their heaviest selling pressure in weeks.
The selloff reflected a combination of concerns that have mounted since early July. Analysts cited worries over whether the artificial intelligence infrastructure buildout can sustain the heavy spending required, alongside fresh evidence that China has made progress in advanced chipmaking capabilities—a development that threatens the premium pricing and market dominance South Korea’s memory chip manufacturers have enjoyed during the AI boom. The losses extended a broader rout in global semiconductor stocks that has unfolded over the past month.
The KOSPI’s decline on Tuesday follows a sharp deterioration that began in early June. The index has fallen more than 25% from its record close of 9,114.55 set on June 22, entering bear market territory by mid-July as profit-taking and shifting sentiment eroded the massive gains that chip stocks had accumulated earlier in the year. The current plunge ranks as the second-worst day in the index’s history—surpassed only by March 4, 2026, when the KOSPI fell 12.06% amid geopolitical tensions, according to the Korea Exchange.
The severity of Tuesday’s move underscores how heavily the KOSPI is weighted toward semiconductor companies. Chip stocks account for roughly half the index’s market capitalization, making the benchmark particularly sensitive to shifts in sentiment around AI demand and chipmaker profitability. When Samsung and SK Hynix face selling pressure, the entire index swings sharply.
The trading halt itself—the third circuit-breaker activation for the KOSPI in July alone—reflects the extreme volatility that has gripped South Korean equities as investors wrestle with conflicting signals about the future of the AI spending cycle. Market-wide circuit breakers are designed to pause trading when an index falls 8% in a single session, giving traders time to reassess and preventing cascading losses driven by panic. The frequency of these halts this month has become a visible marker of the stress in the market.
Prior selloffs in the KOSPI have shown that sharp declines in chipmakers can ripple outward. When the index fell 9.99% on June 23, the move triggered a global sell-off in chip stocks that pulled down semiconductor indices across the United States and Europe, according to reporting at the time. The KOSPI’s outsized influence on global chip sentiment means that Tuesday’s plunge is likely to weigh on semiconductor stocks worldwide in coming sessions.
Sources
- Bloomberg — KOSPI plunged nearly 11%, Samsung Electronics and SK Hynix tumbled over 13% each, Korea Exchange halted trading
- CNBC — Korea Exchange triggered circuit breaker after 8% plunge, 20-minute trading halt
- Reuters — KOSPI closed at 6,806.93 on July 13 after 8.95% decline; March 4, 2026 saw 12.06% plunge, the largest single-day decline in KOSPI history
- Al Jazeera — March 4, 2026 KOSPI plunge of 12.06% eclipsed previous record
- Chosun — KOSPI fell more than 25% from June 22 record high of 9,114.55
- Quartz — SK Hynix and Samsung Electronics shed more than 13% amid chip selloff
- Seeking Alpha — KOSPI entered bear market after falling more than 20% from June peak
