Korean semiconductor stocks drop over 7% amid China’s progress in memory technology and concerns over AI investment

Huoxing Finance reports that on October 13, selling pressure on South Korean semiconductor stocks further intensified. By 11:20 Beijing time, Samsung Electronics fell 7.29%, SK Hynix dropped 8.35%, and the KOSPI composite index declined 6.05% to 5,997.99 points. Early in the trading session, the Korea Exchange briefly activated its sell-side “Sidecar” mechanism, pausing algorithmic trading of KOSPI component stocks for five minutes, signaling a clear surge in market selling pressure. The primary market concern stems from rising competitiveness from China. ChangXin Memory Technologies recently disclosed significant progress in a memory chip architecture also being pursued by Samsung Electronics and SK Hynix. Although this technological breakthrough still has a long way to go before achieving large-scale, commercial production capacity, investors have begun reassessing the potential impact of China’s memory manufacturers’ rapid catch-up on the future pricing power and valuation premiums of South Korea’s two industry leaders. Shifts in the AI investment thesis have further amplified the downturn. Broadcom CEO Hock Tan stated that demand for computing infrastructure continues to outstrip current industry supply, with the supply-demand gap potentially persisting until 2029 or even 2030. As hardware bottlenecks in chips, memory, and power gradually ease, access to capital may become the greatest constraint on AI expansion. Many AI investors do not fully understand the business models they are betting on but have set extreme expectations, making this round of investment “almost like gambling in a casino.” Ha SeokKeun, Chief Investment Officer at Eugene Asset Management, noted that investors are increasingly concerned whether this semiconductor upcycle can extend into 2028 and beyond—a lack of certainty that will continue to suppress valuations for South Korean chip stocks. Despite Samsung reporting record earnings last week, its stock failed to gain significant traction, indicating that market focus has shifted toward the sustainability of growth. South Korea’s earlier strong rally was heavily reliant on Samsung and SK Hynix, and as a result, it now faces concentrated downward pressure. The KOSPI has retreated approximately one-third from its June high and has fallen below its 200-day moving average; since October, foreign investors have net sold over $6 billion in South Korean equities.