Korean Kospi falls 5.5% as Samsung Electronics and SK Hynix slide

The Korea Composite Stock Price Index (Kospi) fell 5.46% Tuesday to 6,035.35, thanks to chip competition fears, doubts about AI spending, and foreign selling.

It was the Kospi's second steep loss in two sessions, as foreign investors sold Samsung Electronics and SK Hynix. SK Hynix fell 10.09% to 1,443,000 won, and Samsung fell 7.39% to 232,000 won. At its low, the index was down 7.4% at 5,911.11, its first trip below 6,000 since July 31.

For U.S. investors, the largest single-country route is the iShares MSCI South Korea ETF, EWY, which slid 2.09 percent in Tuesday's trading in the U.S., closing the day at 166.56.

SK Hynix and Samsung made up 47.6% of EWY's portfolio as of Monday, close to the 50% combined limit its index sets for its biggest holdings.

The rout started Monday, when the Kospi fell 3.65% as foreign investors kept selling, even after Samsung reported record third-quarter earnings last week.

CXMT President Cao Kanyu said Saturday at a chip conference in Shanghai that the company plans to release a DDR5 RDIMM, a standard server memory module, by the end of 2026 built on a “4F²” cell design. The module is a standard part for servers. It is not high-bandwidth memory, or HBM, the stacked chips paired with AI processors. Most DRAM today uses a 6F² cell; shrinking it to 4F² cuts each cell’s area by about a third, so more memory fits on a chip.

Samsung isn’t expected to make 4F² chips until 2028. CXMT gave no specifications or firm launch date, and the product is not high-bandwidth memory, the stacked chips paired with AI processors.

The Seoul Economic Daily said the design cuts the area of each memory cell by about 33% from the one the industry uses now, so a chip of the same size can hold more data. On Tuesday the paper attributed the drop to concern that the plan would add supply of DRAM, the memory in servers and computers.

Samsung is targeting mass production of its own version of the design in 2028, Businesskorea reported.

Industry officials in South Korea told the Seoul Economic Daily it was difficult to conclude that CXMT had pulled ahead, and that large-scale production was still uncertain.

"We're not even talking about HBM here, and the Korean chipmakers are still unquestionably dominating that space, with very little threat at all from the likes of CXMT or anyone else for the foreseeable future," Phillip Wool, chief market strategist at Rayliant Global Advisors, told CNBC.

Wool said the selloff looked out of proportion to the threat, since CXMT hasn’t yet shown it can produce at scale. “I read that more as a sign of how vulnerable AI sentiment is at this moment,” he said.

The VanEck Semiconductor ETF, SMH, fell 2.0% on Monday, to $590.99. SK hynix was 4.1% of that fund as of Monday, against 24.1% of EWY.

On Monday, the day the remarks were reported, the Kospi fell 3.6%. Samsung fell 4.4% and SK hynix fell 4.5%, the Korea Times reported. In New York the same day, Micron Technology, the US memory maker, fell 3.9%, to $989.04, and the Philadelphia Semiconductor Index fell 2.7%. The Nasdaq Composite fell 0.44%, and the S&P 500 was nearly unchanged.

On Tuesday the Kospi opened another 3.1% lower, Yonhap, South Korea's news agency, reported. It pointed to Monday's losses in US technology stocks. At 9:48 a.m. the Korea Exchange ordered a "sidecar," a five-minute halt on program sell orders that kicks in when Kospi 200 futures stay down 5% for a minute. It was the first such sidecar since Aug. 19.

SBS, the Seoul broadcaster, said the Kospi had not traded below 6,000 since July 31.

Japan's Nikkei 225 was down 2.0% in afternoon trade, and Taiwan Semiconductor Manufacturing was down 2.0% in Taipei. Hong Kong's Hang Seng Index was little changed. The Kospi fell further, and Samsung and SK hynix fell harder than those moves.