KOSPI slide deepens as AI jitters hit chips

South Korea’s benchmark KOSPI index recorded a sharp sell-off on July 7, 2026, closing 4.91% lower at 7,656.31 after an intraday decline of more than 8%. The fall extended losses from the previous session and marked one of the steepest single-day moves in recent trading.

The magnitude of the intraday slide triggered market safeguards. A level-1 circuit breaker was activated on the Korea Exchange at around 13:51 KST after the KOSPI remained more than 8% below the prior close for one minute, resulting in a 20-minute suspension of trading.

Selling pressure was concentrated in large technology and semiconductor stocks, which had previously benefited from strong gains tied to enthusiasm for artificial intelligence. The move reflected a rapid shift in sentiment as investors reassessed the growth outlook for AI-related earnings.

Major chip producers were among the hardest hit in the July 7 rout. Shares of Samsung Electronics declined by around 7% in various reports, while SK Hynix fell by roughly 6% to 6.7%, even though Samsung had recently reported a surge in preliminary second-quarter operating profit.

The declines in these heavyweight names weighed heavily on the overall index, given their large index weightings and central role in South Korea’s equity market. The selling came despite ongoing expectations for high demand related to AI infrastructure and memory chips.

The pullback in Korean chipmakers occurred alongside a broader regional retreat in technology and semiconductor stocks. Concerns centered on whether elevated capital spending on AI infrastructure would translate into sustained profit growth for hardware and component suppliers.

Market flow data showed that foreign investors were significant net sellers during the July 7 session. Intra-session figures indicated foreign net sales of about 1.6111 trillion won, while other compilations put total foreign net selling for the day at roughly 2.93 trillion won.

These outflows amplified downside pressure on the index, offsetting other investor groups and contributing to the need for a trading halt. The scale of foreign selling highlighted growing caution among global investors toward Korean equities tied to the AI theme.

At the same time, U.S. equity futures were described as mixed and oil prices were higher, underscoring that the sharp move in Seoul was closely linked to sector-specific revaluation rather than a uniformly negative global macro backdrop.

Weakness in Korean equities extended into the next trading day. On July 8, the KOSPI opened around 7,452.48, about 2.66% below the previous close, and slid intraday toward the mid-7,300s in some reports, indicating continued selling pressure.

By July 8, multiple outlets reported that the index had fallen roughly 20% from its June peak, a decline commonly viewed as placing a market in bear territory. This marked a rapid reversal from earlier AI-driven strength in the benchmark.

The downturn in Korea formed part of a wider pullback in Asian technology benchmarks. Japan’s Nikkei 225 (NKY) also declined, falling 2.12% to 68,256.96, as investors across the region reassessed the sustainability of high valuations in semiconductor and AI-related stocks.