Data center regulation fears push Korea’s chip giants Samsung, SK hynix to 7-month-lows
Fears of tighter regulation on AI data center investments after the US midterm elections have rattled markets, sending South Korea’s benchmark Kospi below the 5,000 mark at one point during intraday trading Friday.
According to the Korea Exchange, the index closed at 5,059.69, down 6.02 percent from the previous session.
It plunged 8.78 percent to an intraday low of 4,911.28 shortly after the opening bell, triggering a circuit breaker and a sell-sidecar in quick succession before recovering slightly. It was the first time the Kospi had fallen below the 5,000 mark during intraday trading since Feb. 6.
With concerns about the sustainability of AI-driven growth weighing on the market, heavyweight chip stocks came under heavy selling pressure.
Samsung Electronics closed down 6.35 percent at 188,700 won ($139), while SK hynix plunged 10.44 percent to 1.132 million won.
Samsung Electronics fell as low as 179,200 won during intraday trading, marking the first time its shares had slipped into the 170,000-won range since April 2. The stock has lost roughly half its value from the year's peak of 374,500 won.
SK hynix also fell to as low as 1.089 million won during the session, breaking below the 1.1 million-won mark. It was the first time the stock had fallen back into the 1 million-won range since April 14. Its intraday low was roughly one-third of this year's peak of 2.987 million won.
The overnight sell-off on Wall Street, where AI and semiconductor stocks tumbled amid heavy selling, sent shockwaves through global technology stocks and spilled over into the Korean market.
The Kospi failed to escape the fallout despite having already plunged 5.28 percent a day earlier, as concerns over tighter regulations on AI data center construction in the US following the midterms had already been priced into the market.
The scale of the Kospi's correction stands out against its performance earlier in the year. The benchmark started the year at 4,214.17 on the last trading day of 2025 before climbing to a peak of 9,114.55 on June 22. It has since plunged to roughly 55 percent of its year-to-date high.
The steep reversal has rendered largely moot the bullish forecasts issued by brokerages just over four months ago, when analysts were competing to predict the index would break through the 10,000 mark.
By investor category, foreign investors were net sellers of 2.77 trillion won, while retail investors and institutions were net buyers of 601 billion won and 1.70 trillion won, respectively.
The tech-heavy Kosdaq also fell 5.03 percent to close at 644.27, with a sell-sidecar also triggered in the secondary market at 9:06 a.m.
With offshore sell-off, the won was quoted at 1,356.6 per dollar as of 3:30 p.m., weakening 14.5 won from the previous session. It was the sharpest level of depreciation since May 12.
Market analysts, however, viewed concerns over tighter AI regulation as disproportionate.
"Both fears of a sharp decline in AI investment and a severe slowdown in the US economy are excessive at this point," said Lee Jun-young, an analyst at Eugene Investment & Securities.
"The likelihood of AI data center construction coming to a complete halt is limited, and we believe market concerns are overblown,” said Lee Kyung-min, an analyst at Daishin Securities.
“We estimate the probability of new project suspensions in Texas, Georgia and Ohio at 15 to 30 percent, with actual risks more likely to center on rising costs and construction delays.”
silverstar@heraldcorp.com
