Chip Sell-Off Routs Global Markets as Kospi Sinks Nearly 10%
South Korea's market tripped a circuit breaker, Nasdaq futures slid about 3%, and the AI trade that powered a year of gains went into sharp reverse. Here is what actually moved, and what it touches.
The trade that carried global markets for a year went into reverse on Tuesday. A sell-off in chip stocks that started on Wall Street spread across Asia and Europe overnight, sending South Korea’s Kospi down nearly 10 percent and dragging US Nasdaq futures lower by about 3 percent before the opening bell.
Seoul took the hardest hit. The Kospi, up roughly 95 percent on the year before this week, fell so fast that the Korea Exchange triggered an automatic 20-minute circuit breaker in the afternoon. Memory-chip makers SK Hynix and Samsung Electronics each dropped more than 12 percent — the two names that had done the most to inflate Korea’s AI-driven rally now doing the most to deflate it.
The damage radiated outward. Japan’s Nikkei 225 fell 3.55 percent, snapping an eight-session winning run. In premarket US trading, Micron slid about 9 percent — a stock still up more than 300 percent this year — a day before it reports quarterly earnings. Sandisk fell nearly 10 percent, Seagate and Intel each more than 7 percent, and Advanced Micro Devices and Qualcomm more than 7 and 6 percent, according to CNBC. The VanEck Semiconductor ETF dropped 6 percent. In Europe, the Stoxx 600 technology index slid 3 percent, led down by ASMI and STMicroelectronics.
Strip out the tickers and the question underneath is simple: have investors paid too much, too fast, for the idea that artificial intelligence will keep needing ever more memory and computing power? Korean regulators had signalled the rally looked overheated, and the profit-taking that followed exposed how crowded the bet had become. The same names dominate index funds and the AI exposure sitting inside millions of retirement accounts, which is why a chip rout in Seoul shows up in a 401(k) in Ohio.
Not everyone read it as a warning. The AI beneficiaries are the sell-off, and I don’t think they’re expensive, but they’re crowded
, Andrew Slimmon, a senior portfolio manager at Morgan Stanley Investment Management, told CNBC. When momentum traders all hold the same stocks, he added, you’re going to have sharp sell-offs like we’re having. I’d argue it’s healthy.
There is a backdrop to the nerves. Memory prices have been on a tear — the supercycle that recently pushed Micron past $1,000 a share — and the cash powering it has come from the same hyperscalers now under scrutiny for how long they can keep spending. Oracle’s decision to cut 21,000 jobs while pouring money into data centres was a sign of how lopsided that bet has grown. Micron’s results on Wednesday, with Cerebras reporting after Tuesday’s close, will be the first real test of whether the demand justifies the price — or whether Tuesday was the market starting to ask the question out loud.
