Moonshot AI's open-source Kimi K3 model pushed the PHLX Semiconductor Index down 10% in a single week, its steepest weekly decline since April 2025. The selloff carried into Asia, where South Korea's Kospi index fell nearly 11% on July 28. What happened with DeepSeek in January 2025 is happening again, only bigger.
Moonshot AI released Kimi K3 on July 17, and the PHLX Semiconductor Index (SOXX) tumbled 10% in a single week — its steepest weekly decline since April 2025. The index has fallen more than 20% from its recent peak, which puts it in bear-market territory.
A 2.8 trillion parameter model, released open-source
Kimi K3 is not a routine model update. It carries 2.8 trillion parameters, and Moonshot AI is making the entire thing open-source — massive scale paired with free availability.
The damage ran wide across US markets. Nvidia, Broadcom, AMD, Arm, Intel, and Micron all took hits during the selloff week.
That slide also coincided with profit-taking following extensive prior gains in the sector.
The selloff reaches Seoul
Asia caught the decline by late July. On July 28, South Korea's Kospi index plummeted nearly 11%.
SK Hynix, a major supplier of the high-bandwidth memory chips that power AI data centers, dropped 14%. Samsung Electronics fell 13%.
Export controls did not slow China's chipmakers
Chip investors have run this pattern before. When DeepSeek released its R1 model in January 2025, the result was approximately $1 trillion in losses across global tech stocks.
US policy contributed to the acceleration rather than blocking it. Export controls initiated in 2025 restricted access to advanced chips to slow China's AI progress, but they appear to have turbocharged the country's push toward semiconductor self-sufficiency instead. State-led domestic equipment production has bolstered Chinese chip manufacturing, creating an ecosystem increasingly independent of Western supply chains.
The harder risk to model is regulatory escalation. If the US answers Kimi K3 by tightening export controls further, that could create additional short-term disruption for chip companies drawing significant revenue from Chinese customers, and Nvidia's China business is already constrained by existing restrictions.
Source: Crypto Briefing
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