Less than a month after breaking through the 9,000 level and dreaming of "10,000-pi," the KOSPI has collapsed helplessly because the chip peak controversy shows no sign of subsiding. The major event of SK hynix's (000660.KS) listing of American Depositary Receipts (ADRs) concluded, exhausting the catalyst, while a downward revision of second-quarter operating profit fueled the decline. On top of this, repeated plunges this month alone—down 7.89% on the 2nd, 4.91% on the 7th, and 5.35% on the 8th—weakened retail investors' sentiment to an extreme.
According to the Korea Exchange on the 13th, the combined market capitalization of the KOSPI's top four stocks—Samsung Electronics (005930.KS), SK hynix, SK Square, and Samsung Electro-Mechanics—fell by a total of 1,522.2983 trillion won, from 4,574.5959 trillion won on the 25th of last month when it neared a record high to 3,052.2976 trillion won as of that day. It was a sharp correction in just three weeks.
By stock, SK hynix saw the largest decline. SK hynix's market capitalization fell by 764.0169 trillion won (36.75%), while Samsung Electronics fell by 608.0129 trillion won (29.01%). From these two stocks alone, 1,372 trillion won vanished. SK Square and Samsung Electro-Mechanics also saw their market capitalizations evaporate by 97.3853 trillion won (38.86%) and 52.8831 trillion won (35.45%), respectively.
The share price declines were also steep. Samsung Electronics fell from 358,500 won on the 25th of last month to 254,500 won as of that day, while SK hynix dropped from 2.917 million won to 1.845 million won. The share prices of SK Square and Samsung Electro-Mechanics, which had surpassed 2 million won, also fell to 1.161 million won and 1.289 million won, respectively. Japan's Kioxia Holdings also dropped 12.86%, surrendering its position as the top stock by market capitalization.
This correction aligns with the theory that Big Tech's artificial intelligence (AI) investment has peaked. Last month, Meta's announcement that it was reviewing a cloud business to provide surplus AI computing resources externally, and Apple's product price increases, also fanned the flames in earnest.
In particular, sell-offs centered on chip stocks intensified after Korea Investment & Securities released a report stating that SK hynix's second-quarter earnings would fall short of market expectations. The report projected SK hynix's operating profit for the second quarter of this year at 60.4 trillion won, about 8% below the market consensus of approximately 65 trillion won. It explained that, because the proportion of high-bandwidth memory (HBM) revenue is higher than that of competitors, the average selling price (ASP) growth rate is expected to be lower than the market average.
Nonetheless, the market interpreted the decline as the effect of cracks in the AI industry narrative, a reversal of valuations, and a supply-demand (leverage liquidation) shock rather than fundamental damage. As a vicious cycle formed between domestic investor sentiment and single-stock leveraged exchange-traded funds (ETFs), the KOSPI has posted a distinctly weaker performance than global markets. Unlike the sharp declines in the KOSPI (-8.95%) and KOSDAQ (-4.55%), the Nikkei fell only 1.92%, while Hong Kong's Hang Seng Index and Taiwan's Taiex rose. In other words, the analysis is that the result stems from profit-taking following a short-term surge combined with the exhaustion of catalysts, rather than a deterioration in the chip industry cycle. Baek Young-chan, head of the research center at Sangsangin Securities, said, "Rather than doubts about chip earnings themselves, the correction appeared as skepticism about the sustainability of AI investment, profit-taking due to the short-term surge, and the exhaustion of catalysts after SK hynix's ADR listing all overlapped."
Experts predicted that while expectations for earnings improvement remain valid, high volatility centered on large-cap tech stocks could continue for the time being, as the price burden from the short-term surge has grown. Lee Young-gon, head of the research center at Toss Securities, explained, "It appears that supply-demand had a greater impact than fundamental issues," adding, "The market fell sharply as the accumulated desire for profit-taking, centered on chips, erupted all at once."
Accordingly, the earnings announcements at the end of this month from companies including Samsung Electronics and SK hynix, and whether AI investment expansion will continue as indicated in hyperscalers' conference calls, are cited as key variables for the future share price trajectory. Starting with Alphabet on the 22nd, Meta, Microsoft, and Amazon, among others, will release their earnings this month. Lee Kyung-jun, head of the ETF division at Kiwoom Asset Management, said, "This decline is a localized bubble burst that appeared as supply-demand became tangled after a short-term surge. AI demand and corporate fundamentals remain solid, so from a long-term perspective, this can be seen as a process in which the market is again laying the foundation for a rise."
