Kospi Index Plunges Over 9% as Global Chip Selloff Sparks Market Panic

South Korea’s Kospi Index plunged as much as 10.5% on Tuesday, July 28, 2026, hitting an intraday low of 6,051.19 points. The rout triggered a full 20-minute trading halt after the index breached its 8% circuit-breaker threshold at 10:13 a.m. local time. Chipmakers Samsung Electronics and SK Hynix led the collapse, tumbling 12% and 12.7% respectively.

Fears over the sustainability of the global AI boom, paired with rising Chinese competition in memory chips, drove the sell-off. 

How The Kospi Index Selloff Unfolded

The Kospi Index opened sharply lower and continued to decline throughout the morning session. Multiple trading curbs activated in succession as the decline accelerated toward its steepest point.

• Market open: down 5.26% to 6,400.27, triggering a sell-side sidecar at 9:06 a.m.
• 10:10 a.m. level: down 8% to 6,215.19.
• Circuit breaker triggered: 10:13 a.m., halting all trading for 20 minutes.
• Intraday low: down 10.5% to 6,051.19 by midday.

This marked the index’s eighth circuit breaker of 2026 and its 14th ever recorded. A sell-side circuit breaker also hit the Kosdaq exchange, marking the Kospi’s 22nd such trigger this year alone.

Samsung And SK Hynix Lead The Chip Rout

South Korea’s two largest memory chipmakers absorbed the heaviest losses during the session. Both stocks fell well beyond the broader index’s overall decline.

• Samsung Electronics: fell as much as 12%, with some reports citing a 9.45% drop.
• SK Hynix: dropped 12.7%, falling below its own recent IPO price.
• Both companies report Q2 2026 earnings on Wednesday, July 29, 2026.
• SK Hynix’s report marks its first since a record Nasdaq debut.

That earnings timing adds significant pressure heading into tomorrow’s results. Investors will be watching closely whether guidance can calm fears that triggered today’s historic decline.

What’s Driving The Global AI Chip Selloff

Analysts point to a mix of funding concerns and rising competition as the core drivers behind today’s rout. Weakness had already been building across US chip stocks before Tuesday’s Asian selloff.

• China’s CXMT memory-chip IPO intensified competitive concerns for Korean suppliers.
• Nvidia’s recent stock decline weighed on sentiment across the AI supply chain.
• Monday’s US session saw the VanEck Semiconductor ETF fall over 2%.
• AMD fell 5%, and Teradyne dropped 4% in Monday’s US trading.

That US weakness set the stage for Tuesday’s deeper Asian rout. Analysts describe growing “AI fatigue” as investors reassess whether current chip valuations reflect realistic demand.

The Selloff Spread Across Asian Markets

Japan and Taiwan also felt significant pressure as the chip-sector rout extended beyond South Korea. Chip-linked names across the region posted some of the sharpest single-day declines.

• Nikkei 225: fell 3.90% on the session.
• Topix: declined 2.49%.
• Taiwan’s Taiex: dropped more than 4%.
• Kioxia: plunged 16.5%, the steepest move among major Japanese chip names.

Tokyo Electron fell over 9%, Advantest slid 8%, and SoftBank Group, an AI proxy through its Arm stake, dropped nearly 5%. That breadth shows the selloff wasn’t isolated to Korea alone.

South Korea's entire stock market just triggered a trading halt as billions vaporized in minutes, but here's why the businesses behind the crash are actually stronger than ever (Save this).

Samsung Electronics and SK Hynix together account for roughly half of the entire KOSPI's… pic.twitter.com/7wVQ4TS0OL

— Melvin (@MelvinInvests) July 28, 2026

Context Behind The Kospi’s Sharp Reversal

Tuesday’s crash marks a dramatic reversal for a market that had been among 2026’s strongest performers. The Kospi’s rapid ascent over the past 18 months makes this pullback especially jarring for investors.

• Kospi 2025 gain: roughly 75%, driven largely by the AI and semiconductor boom.
• Additional 2026 gain before the crash: around 50%, extending the rally further.
• US markets Monday: Dow Jones rose 0.51% to 52,210.08.
• S&P 500 and Nasdaq: closed roughly flat, up 0.02% and down 0.18% respectively.

That divergence between Monday’s calm US close and Tuesday’s Asian panic highlights how concentrated the AI-valuation anxiety remains in chip-heavy markets like Korea, Japan, and Taiwan.

Bottom Line

Tuesday’s Kospi crash reflects mounting doubts about the AI investment cycle’s staying power, compounded by fresh competitive threats from Chinese chipmakers. Samsung and SK Hynix bore the brunt, both sliding double digits ahead of Wednesday’s crucial earnings reports.

With circuit breakers and sidecars triggering repeatedly throughout the session, today’s volatility ranks among the sharpest in the Kospi’s recent history. Investors should watch Wednesday’s Samsung and SK Hynix earnings closely for signs of whether this selloff proves temporary or marks a deeper valuation reset.

Disclaimer:

The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.