AI Chip Pullback Drags Asian Markets Lower, South Korea Drops Nearly 6%
Claire Weston
Asian chip stocks sold off sharply Tuesday, with Korea's Kospi plunging 5.9% and Samsung dropping 8.4%; the selloff is less about losing faith in AI than about a market priced for perfection now demanding proof through earnings.
Why did Korea fall the hardest?
Samsung Electronics slid 8.4% and SK Hynix dropped 7.5%, dragging the entire Kospi index down.
Samsung had flagged a roughly 19-fold year-on-year jump in Q2 operating profit — the numbers were strong. This means → the selloff was not driven by deteriorating fundamentals but by good news already baked into the price.
In plain terms = Kospi had rallied about 100% in the first half; some investors chose to lock in gains ahead of earnings season.
How did other Asian markets react?
Japan's Nikkei 225 fell 1.3%. Chip-equipment maker Tokyo Electron dropped 2.45%; memory firm Kioxia Holdings tumbled 11%.
This reflects a region-wide cooling across the Asian AI chip chain, not a Korea-only event.
Hong Kong's Hang Seng was roughly flat; Singapore's Straits Times Index rose 0.8% — markets less exposed to chips took markedly less damage.
What are investors really worried about?
Tickmill Group analyst Patrick Munnelly: "Investors haven't abandoned the AI narrative, but they're asking whether a sector priced for perfection can keep delivering perfect results through the entire earnings season."
This means → chip valuations already embed the most optimistic scenario. Any single earnings miss could trigger another leg down.
In plain terms = the market still believes in AI — but the price has run ahead of the profits, and now it needs profits to catch up.
Why didn't oil prices spike?
Iran's Islamic Revolutionary Guard Corps fired missiles at two commercial vessels near the Strait of Hormuz, lifting geopolitical risk. WTI crude rose 0.7% to $69.03 a barrel; Brent climbed 0.7% to $72.51.
Yet Saudi Arabia cut its flagship crude price for Asian buyers sharply — the first discount in years — offsetting the geopolitical premium.
ANZ analysts noted that shippers remain cautious about the Strait; oil-flow recovery is slower than expected. This means → supply-side caution and demand-side discounting coexist, pinning oil in a range with no clear short-term breakout.
Content is for reference only, not financial advice.