Key facts
- Investors are questioning the profitability of AI companies and their reliance on external financing.
- Concerns over the sustainability of AI investment beyond the next 12 months are prompting a reversion to valuing semiconductor stocks as commodity-driven cyclicals.
- Chinese chipmaker CXMT plans to unveil a new server-memory product by year-end, raising fears of increased supply and pressure on chip prices.
- Buybacks by Samsung and SK Hynix, which had supported the market since August, are winding down.
South Korea's benchmark Kospi index plunged 8% on Thursday, with major chipmakers Samsung Electronics and SK Hynix falling 11% and 12% respectively, triggering a trading halt. The selloff reflects global concerns about the sustainability of massive AI spending and the impact of persistently high interest rates. Investors are increasingly questioning the valuations of semiconductor stocks, even with strong earnings outlooks, as doubts grow about the profitability of leading AI companies and their reliance on external financing. Analyst Mingyu Kim of KB Securities noted that concerns over AI investment beyond the next 12 months are leading the market to view semiconductor stocks as commodity-driven cyclicals. Despite Samsung Electronics forecasting a nearly ninefold increase in third-quarter operating profit last week, its shares have lost nearly a fifth of their value. Competition from Chinese chipmaker CXMT, which plans to launch a new server-memory product, is also a concern. Foreign investors sold over 12 trillion won of South Korean stocks in October, and buybacks by Samsung and SK Hynix are winding down, reducing market support. The Kospi, once the world's best-performing major market in the first half of 2026, has fallen about 35% since the end of June.