South Korea's Kospi fell more than 10% on Tuesday, prompting a short halt in trading, as the sell-off in global chipmakers deepened. Futures tracking the Nasdaq 100 pointed to further losses for US chip and memory stocks at the Wall Street open. Reports of Chinese advances in chipmaking equipment added to investor doubts about AI spending.
Investors dumped shares in SK Hynix and Samsung Electronics on Tuesday, sending South Korea's Kospi down more than 10% and prompting a short halt in trading. Futures tracking the Nasdaq 100 index fell 1%, with US chip and memory stocks set to extend the previous day's losses, as fears over the durability of the AI boom intensified before results from some of Silicon Valley's biggest companies this week.
Seoul and Tokyo take the brunt
SK Hynix fell 14.7% on Monday, while its larger rival Samsung Electronics dropped 13.4%. Both companies' share prices have dropped more than a third in July's chipmaker sell-off, but remain 138% and 83% higher year-to-date. Regulators in Seoul halted trading through circuit breakers for the ninth time in 2026.
In Tokyo, the Nikkei 225 fell 4.4%, with memory-chip maker Kioxia plunging more than 18%. This month's sell-off has slashed Kioxia's share price in half.
Concerns over future oversupply have also weighed on sentiment, because leading chipmakers have recently unveiled aggressive expansion plans. SK Hynix and Samsung plan to build two new chip plants apiece in South Korea as part of a combined Won800tn ($548bn) investment to double their production capacity for DRam chips over five years.
Chinese lithography advances trigger the latest leg down
The Information reported on Monday that three Chinese companies — SMIC, Hua Hong Semiconductor and CXMT — had made significant advances in producing deep ultraviolet lithography machines, a technology that had hitherto essentially been the preserve of ASML. In Europe, ASML fell 2.6%.
Semiconductor stocks were already in correction mode, with concerted profit-taking in the Philadelphia Semiconductor Index and sharp losses for Micron and others on Monday.
US chip stocks set to extend losses
Sandisk, which plunged 11% on Monday, was down more than 5% in pre-market trading on Tuesday. The stock has lost more than 40% of its value over the past month, but nevertheless remains more than five times higher since the start of 2026. Western Digital, Micron, Advanced Micro Devices and Intel were all down at least 4% in pre-market trading.
Earnings week tests AI spending
Microsoft, Meta, Apple and Amazon all deliver results this week. Alphabet's share price dropped 7% in one day last week, following the company's announcement that Google had burned through cash in the second quarter to fund AI infrastructure spending. According to the Financial Times, Marija Veitmane, head of equity research at State Street, said negative momentum was building up in the sell-off: "The market is worried about extra borrowing, extra capex, how sustainable it is".
The Korean chipmakers report next: SK Hynix publishes second-quarter results on Wednesday, with Samsung following on Thursday.
Sources: Financial Times, MarketWatch
Trading involves risk.
Risk Disclaimer
