South Korea’s benchmark KOSPI index collapsed 10.8% on July 28, closing at 6,023.66 in its steepest single-session plunge since early March. The culprits were the same two names that powered the index to record highs just weeks ago: Samsung Electronics and SK Hynix, which together account for more than half the index’s weighting.
Samsung shares cratered between 13.4% and 14.4%, marking the company’s worst daily loss since October 2008. SK Hynix fared even worse, shedding 14.7%. The KOSPI peaked around 9,114.55 in June.
What triggered the freefall
The selloff traces back to July 27, when China’s ChangXin Memory Technologies made its debut on the Shanghai STAR Market. CXMT’s shares surged 466% from an IPO price of 8.66 yuan, catapulting its market capitalization to roughly $484 billion.
South Korean investors responded by unwinding leveraged positions ahead of Q2 earnings reports from local chipmakers. Circuit breakers and trading halts kicked in multiple times during the session, the eighth time KOSPI circuit breakers have been activated in 2026 alone.
The broader catalyst was a global semiconductor stock slump, driven by concerns over stretched valuations tied to AI hype, potential oversupply in memory chips, and intensified competition from China’s chip industry.
The AI trade unwinds
Samsung and SK Hynix were the primary beneficiaries of the AI-fueled semiconductor boom that pushed KOSPI to record territory. As prices dropped, margin calls forced additional selling, which pushed prices lower, which triggered more margin calls.
CXMT’s blockbuster IPO punctured the bullish narrative around Korean chipmakers by suggesting the supply side of the equation is about to get a lot more crowded. Concerns about potential oversupply in memory chips had been simmering for months, but investors were willing to look past them as long as AI spending kept accelerating.
What this means for crypto and risk markets
South Korea is one of the most active retail crypto trading markets on the planet. Korean investors who just watched their equity portfolios get shredded are less likely to be rotating into Bitcoin or altcoins anytime soon.
The AI narrative has been one of the strongest tailwinds for crypto in 2026, particularly for tokens associated with decentralized computing, data infrastructure, and AI-adjacent protocols. If the broader market starts questioning whether AI demand justifies current valuations across the tech sector, that skepticism will inevitably bleed into AI-themed crypto tokens as well.