AI-Driven Sell-off Slams South Korean Chip Shares and Triggers Global Market Jitters

Investors have sharply withdrawn from artificial-intelligence-related equities, pulling South Korea’s Kospi index down more than 11% to its lowest level in three months. The decline was driven chiefly by double-digit drops in the shares of semiconductor giants SK Hynix and Samsung Electronics, each falling by over 10%. The broader tech sector felt the ripple, with U.S. chip names such as Intel, AMD, SanDisk, Western Digital and Seagate all sliding more than 4% and the Nasdaq-100 index dipping as much as 1.8% before stabilising.

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Analysts link the sell-off to mounting concerns over the “circular funding” model that underpins many AI firms, whereby companies finance each other’s datacentre expansions, creating high leverage. A separate report highlighted China’s rapid progress in mass-producing deep-ultraviolet (DUV) chip-making tools and the spectacular 466% first-day surge of Chinese memory chip maker CXMT on its Shanghai debut. These developments have heightened fears that cheaper Chinese equipment could erode the competitive edge of established global chip makers.

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• Kospi index down 11.5% from its mid-April peak.

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• SK Hynix and Samsung Electronics each down >10%.

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• Nasdaq-100 fell up to 1.8% during the session.

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• Apple briefly breached a $5 trillion market-cap, becoming the second company to do so.

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• Nvidia shares closed 5% lower, slipping below $200 per share, while its five-year credit-default-swap spread widened sharply.

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Swissquote senior analyst Ipek Ozkardeskaya noted that the rapid drop in Nvidia’s price and the spike in its CDS spread suggest the timing may not be right for investors seeking a dip purchase.

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• “We believe the market was likely spooked by the progress of China’s chip-making equipment capabilities, and was worried that this progress would threaten the competitive position of global chip making and chip equipment leaders,” — Jing Jie Yu

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• “The market reaction to the Nvidia news was swift. Nvidia fell 5% and closed the session below the $200-per-share mark. More importantly, Nvidia’s five-year CDS spiked, suggesting that it may not yet be the right time to buy the dip,” — Ipek Ozkardeskaya, a senior analyst at Swissquote

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