South Korea's two largest chipmakers slipped again on Thursday, threatening to stall a sharp rebound as investors remain wary of the country's heavy reliance on the artificial intelligence boom. Samsung Electronics declined 0.22% and SK Hynix lost 0.93% in early trading, while the broader KOSPI index fell 0.68%. The pullback follows a strong session on Wednesday, when both stocks surged more than 7% and the benchmark recovered 3.29%.
The renewed volatility comes after an October selloff that wiped out approximately $792 billion in market value from Korean equities through Tuesday. Despite robust memory demand, uncertainty persists over how AI-related orders will be financed, leaving investors cautious.
Foreign investors remain the crucial swing factor
Foreign investors sold a net 18.115 trillion won of KOSPI shares between October 1 and 20, according to Chosun. Samsung accounted for 4.075 trillion won of those outflows, while SK Hynix saw 9.966 trillion won in foreign selling. Overseas buyers returned on Wednesday, purchasing about 660 billion won of Korean shares, which helped lift Samsung 5.67% and SK Hynix 5.81% at the close. However, Thursday's retreat shows how easily confidence can falter.
Mirae Asset Securities executive Seo Sang-young noted that the market's direction depends heavily on foreign flows into chipmakers and international oil prices. Higher energy costs and expensive borrowing complicate the outlook for AI data centers, while profit-taking after Wednesday's rally adds short-term pressure.
Two chipmakers magnify Korea's market losses
South Korea's benchmark lost about 1.05 quadrillion won, equivalent to $792 billion, in market value during October through October 20. Samsung and SK Hynix together represent nearly half the KOSPI's market value, so when foreign funds cut exposure to the pair, the effect spreads far beyond semiconductor portfolios. Even small changes in appetite for memory stocks can move the entire benchmark.
The concentration extends to leveraged retail investors. Margin loans secured against the two stocks totaled around 9.2 trillion won at the end of September, according to NICE Investors Service. That borrowing can amplify volatility if falling prices prompt investors to raise cash or reduce positions.
Kyle Rodda, a senior analyst at Capital.com, told Reuters on Thursday that markets are still digesting technology earnings alongside uncertainty over interest rates and geopolitical developments. His warning captures the wider problem: strong chip sales provide little immediate protection when investors are reassessing risk across markets.
Earnings must show demand can endure
SK Hynix releases third-quarter results on October 28, followed by Samsung on October 29. Investors will focus on high-bandwidth memory sales, pricing, order visibility, and guidance for 2027. They will also seek assurances that customers have not begun postponing orders because of higher financing costs.
Near-term fundamentals remain encouraging. South Korea's semiconductor exports rose 222.5% by value in the first 20 days of October, reflecting strong prices and demand, although export revenue is not a measure of shipment volumes. Competition from China's CXMT and questions surrounding debt-funded AI infrastructure nevertheless leave future profits uncertain.
Kiwoom Securities analyst Han Ji-young warned of further volatility as investors absorbed Wednesday's gains and mixed US technology results, according to Bloomingbit on Thursday.
This article is for informational purposes only and does not constitute financial advice.
