South Korea's KOSPI has lost roughly 35% of its value this month, and circuit breakers have been triggered multiple times as semiconductor shares slid. The selloff reaches beyond Seoul: the Philadelphia Semiconductor Index is heading for its worst month since 2008, while Korean crypto trading volumes have contracted alongside equities.
South Korea's benchmark KOSPI index has lost roughly 35% of its value this month, a collapse severe enough that circuit breakers have been triggered multiple times. Behind it sits a semiconductor meltdown driven by fears that Chinese chipmakers are closing the gap on Korean giants.
On July 28 the index plunged 10.84% to close at 6,023.66, its largest single-day decline since March. Samsung Electronics dropped 14.4% and SK Hynix fell 14.7% in the same session.
A chip-heavy index gives back months of gains
The KOSPI peaked at approximately 9,114 in June and now sits around 6,000, roughly 34% below that high. Yet the index is still up about 43% year-to-date, so July has effectively incinerated months of gains in less than four weeks.
Structural concentration is the core issue. South Korea's market is disproportionately weighted toward semiconductor companies, and when the narrative around those companies shifts, the whole index moves with it — which is why Korean chip stocks are falling faster than their global peers. Retail traders, who have been increasingly active in Korean equity markets, appear to be contributing to the volatility.
The rout spreads to chip benchmarks abroad
The Philadelphia Semiconductor Index has declined 18.9% so far in July and is on track for its largest monthly loss since 2008. Every stock in the index now trades below its 50-day moving average, the first such occurrence since April 2025, according to FactSet data. However, strategists at The Kobeissi Letter wrote in a note: "Chip stocks are becoming oversold".
SK Hynix earnings add to the pressure
SK Hynix reported a record second-quarter operating profit, up 557% from a year earlier, which still fell short of lofty expectations. The company also plans to raise 2026 capital spending by roughly 50% to at least $31 billion as it ramps up AI memory production, raising investor concerns about potential overinvestment in AI infrastructure. Barclays analysts cut their price target on the US-listed stock to $300 from $330 after the results, while keeping an Overweight rating.
A strong debut from Chinese memory maker CXMT in Shanghai this week reignited concerns that expanding memory supply could pressure chip prices. Korean crypto exchanges felt the equity selloff too, with trading volumes falling to as low as 1.6% of KOSPI turnover on at least one occasion. Instead of rotating out of equities into crypto, Korean investors appear to be pulling back from risk assets across the board.
Sources: Crypto Briefing, Yahoo Finance, Yahoo Personal Finance
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