South Korean equities suffered a sharp sell-off on Thursday, with the benchmark KOSPI dropping as much as 8% and forcing the Korea Exchange to activate a level-one circuit breaker. The halt lasted 20 minutes, beginning at 12:38 p.m. in Seoul, after the index stayed at least 8% below its previous close for a full minute. By later in the session, the KOSPI was down 7.7% at 5,548.78.
The decline was led by the country's two largest chipmakers. Samsung Electronics lost 9.5%, while SK Hynix tumbled 11.4%. Their heavy weighting in the index made the KOSPI the region's most visible casualty of a broader retreat from artificial intelligence-related shares.
AI financing concerns move to the foreground
While hotter-than-expected US inflation provided the immediate trigger, the deeper anxiety centered on the economics of the AI buildout. Investors are increasingly asking whether the companies funding data-center and hyperscaler expansion can maintain current spending levels. That question hit Wall Street first: CoreWeave dropped nearly 16% on Wednesday as the yield on one of its bonds approached 15%, and Oracle fell about 9%. The Philadelphia Semiconductor Index slid 4.3%, extending its decline to almost 12% over nine sessions.
Kiwoom Securities analyst Han Ji-young told Asia Business Daily that the market's benchmark for the AI cycle is shifting away from the sheer size of capital expenditure toward profitability, cash generation and the stability of financing.
Japan feels pressure at both ends of the AI chain
Japan's Nikkei 225 fell 4.8% to 64,489.06, with SoftBank, Kioxia and Tokyo Electron among the biggest drags. Kioxia dropped 11.2% and Tokyo Electron lost 7.3%, while SoftBank declined about 9.4%. The conglomerate is increasingly viewed as a listed proxy for the financing and valuation of OpenAI and the wider AI infrastructure boom.
The Nikkei's composition amplifies these moves. Technology accounted for 43.75% of the index before Thursday's session, with Advantest, Tokyo Electron and SoftBank among its largest individual weights. XS.com analyst Antonio Di Giacomo told The Wall Street Journal that persistent inflation, costly borrowing and doubts around technology companies were combining to weaken risk appetite.
Regional spillover and the demand question
The selling spread across Asia. Taiwan's Taiex dropped about 3%, Hong Kong's Hang Seng lost 1%, the Shanghai Composite fell 1.4% and Australia's ASX 200 edged 0.1% lower.
Yet there is still little evidence that physical AI demand has collapsed. ASML said this week that equipment demand is likely to exceed supply through 2028, with customers already discussing capacity for 2029 and 2030. TSMC provides the next test. Third-quarter revenue already reached a record NT$1.49 trillion, while analysts expect net profit to rise about 65% to NT$746.3 billion, which would mark a sixth consecutive record quarter.
This article is for informational purposes only and does not constitute financial advice.
