KOSPI, Nikkei slide as chip selloff deepens

A renewed selloff in major US semiconductor names has set up a weaker tone for Asian trading. A widely watched US gauge of semiconductor giants fell 2.2%, leaving the S&P 500 (SPX) close to flat even though most individual stocks advanced. Futures tied to the Nasdaq 100 Index (NDX) slipped 0.2% in early Asian hours after the underlying benchmark declined in the prior US session. The pressure on chipmakers contrasted with broader equity resilience, underscoring how influential the sector has become for index-level moves.

The renewed chip weakness comes as investors reassess positioning in high-growth, AI-related names. While other sectors showed signs of stability, semiconductor stocks dragged on overall performance. This created a challenging backdrop for markets opening across the Asia-Pacific region, where technology and hardware exporters are heavily represented in benchmark indices.

South Korea’s stock market experienced particularly sharp moves as the global chip selloff deepened. During intraday trading on July 28, the Korea Exchange activated a sell-side sidecar mechanism that temporarily suspended program sell orders. The measure was taken to help curb volatility as selling pressure in large-cap names intensified.

South Korea’s market has become a bellwether for global AI sentiment, with leveraged positions in chip-related stocks amplifying swings. SK Hynix (SKHY) and Samsung Electronics, both key memory-chip producers, are central to this dynamic as investors use them to express views on demand for AI infrastructure. The latest bout of turbulence highlighted how quickly sentiment can shift when global chip benchmarks retreat.

The sidecar activation indicates the scale of intraday stress in the market. While the mechanism is designed to stabilize trading conditions, it also signals that automated and program-driven selling played an important role in the downturn. The episode underlined the sensitivity of South Korean equities to developments in the global semiconductor cycle.

SK Hynix (SKHY) and Samsung Electronics are set to test investor appetite for memory chips amid these swings. Their forthcoming earnings are viewed as important checkpoints for understanding how demand for AI-related hardware is evolving. With South Korea’s equity market now closely associated with global AI themes, results from these companies could influence both domestic and international risk sentiment.

Leveraged bets on AI and memory-chip exposure have contributed to what observers describe as violent swings in South Korean shares. When expectations for AI-related growth are high, flows into these stocks can push indices higher; when those expectations are questioned, the reversal can be abrupt. The current selloff in global chipmakers has moved the pendulum toward caution, at least in the near term.

The impact of the chip-led downturn extended beyond South Korea to other key Asian markets. Japan’s Nikkei 225 (NKY) fell sharply during the same episode, with one trading report citing an intraday drop of about 3.75%. The move reflected both local exposure to semiconductor supply chains and sensitivity to global technology demand.

The selloff coincided with a continued decline in crude oil prices, adding another layer of risk-off sentiment to regional markets. While the primary focus remained on semiconductor and AI-related names, the broadening weakness in commodities pointed to wider concerns about the global growth outlook. Together, the shifts in equities and oil signaled a more cautious stance among investors as they reassessed risk across asset classes.