Shares of South Korean chipmakers Samsung Electronics and SK Hynix slumped as much as 14.5% on Thursday, dragging the benchmark Kospi down 8.2%. This followed Meta Platforms Inc.'s reported plans to sell computing power, which sparked fresh concerns over excess AI capacity and triggered a broad selloff in semiconductor stocks.
The weakness was compounded by an overnight rout in U.S. technology shares, which weighed on investor sentiment across Asian markets. In the US, Micron Technology Inc and SanDisk both ended the previous session with losses of more than 10%.
SK Hynix was among the worst performers, plunging over 14%, while Samsung Electronics fell more than 10%. The Korea Exchange also halted trading for 20 minutes after market circuit breakers were triggered, reflecting heightened volatility. Together, Samsung Electronics and SK Hynix account for more than half of the Kospi index.
The sharp decline has reignited concerns over whether the rally in AI-related semiconductor stocks has run ahead of fundamentals. South Korean chipmakers have been among the biggest beneficiaries of booming demand for advanced AI hardware, but the latest selloff highlights how quickly sentiment can deteriorate when investors begin questioning the durability of that demand.
Pressure on the sector also intensified after reports that Apple Inc. is in discussions to source chips from two Chinese semiconductor manufacturers, raising fears that Samsung Electronics and SK Hynix could face stronger competition.
"Meta considering selling its 'excess compute' suggests it may be struggling to find a good use for it or may have overbuilt," Vey-Sern Ling, managing director at Union Bancaire Privee, told Bloomberg. "That would have negative implications for the 'picks and shovels'" in markets such as Korea, he said.
The rally had already shown signs of overheating before the latest correction. SK Hynix shares had surged nearly 223%, comfortably outperforming Samsung Electronics, which had gained 123%. Market participants say valuations had moved well beyond underlying fundamentals.
Korea retains top spot
Despite the recent slump, the Kospi remains the world's best-performing major stock index in 2026, having advanced 77% so far this year, driven largely by the surge in AI-linked semiconductor stocks.
Read more: Samsung to invest $90 billion in South Korea's Chungcheong province
Demand for AI infrastructure has soared over the past year as technology companies race to build more powerful AI models and expand computing capacity. The resulting increase in orders for high-bandwidth memory chips has fuelled a strong rally in Korean chipmakers, which occupy a key position in the global AI supply chain.
However, South Korea's dependence on a small number of semiconductor heavyweights has also made its equity market more vulnerable to abrupt changes in sentiment surrounding the AI theme.
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