KOSPI Tumbles 5% as Banks Turn Bearish, SK Hynix Sees AI Chip Boom

SK Hynix and Samsung Electronics produce roughly two-thirds of the world’s memory chips and are central to the high-bandwidth memory supply chain powering AI servers. Their heavy weighting in South Korea’s Kospi makes the benchmark unusually sensitive to shifts in the AI trade. Volatility has also been amplified since regulators approved 16 single-stock leveraged exchange-traded funds tied to the two companies in late May.

The Kospi closed 10.84% lower at 6,023.66 on July 28, prompting the Korea Exchange to impose a 20-minute marketwide halt. SK Hynix sank 14.7% and Samsung Electronics lost 13.4%. An attempted rebound failed on July 29, when the benchmark fell about 7.5% intraday as SK Hynix and Samsung dropped nearly 13% and 8%, respectively. The renewed selling reflected concerns over AI infrastructure financing, rising Chinese competition and leverage-driven fund outflows.

SK hynix sits at the center of the artificial-intelligence hardware boom as demand for high-bandwidth memory, or HBM, expands alongside investment in AI servers and data centers. That exposure has made the chipmaker a bellwether for South Korea’s technology sector. A recent wave of leveraged position unwinding had intensified losses across semiconductor shares, leaving investors focused on when forced selling would subside and whether capital would return to the AI supply chain.

Sentiment improved as investors judged the market’s deleveraging cycle to be nearing an end and SK Group Chairman Chey Tae-won increased his holding in SK hynix. The move was viewed as a vote of confidence in the memory-chip maker and the broader AI investment cycle, helping drive the KOSPI up more than 16%. The report did not disclose the stake size, transaction value or exact purchase date, while analysts said AI infrastructure spending remained supportive of semiconductor demand.

A renewed escalation in geopolitical conflict in the Middle East sent global financial markets into turmoil. South Korea is a key bellwether for the global semiconductor and technology industries, making its market performance significant for the worldwide electronics supply chain. The selloff showed the direct impact of geopolitical crises on the technology sector and fueled a rapid flight from risk, putting pressure on both the previously buoyant AI chip market and cryptocurrencies.

As tensions in the Middle East escalated sharply on July 15, 2026, South Korea’s benchmark KOSPI plunged more than 8% that day, triggering its seventh circuit breaker of the year. Shares of leading AI memory-chip maker SK hynix tumbled 13% under heavy selling pressure. The cryptocurrency market also declined, with Bitcoin falling below $63,000 as global investors accelerated their retreat from risky assets.

SK Hynix is a major supplier of high-bandwidth memory (HBM) to AI chipmakers including NVIDIA. The expansion of AI data centers by Microsoft, Google and Meta has driven up memory demand and prices. As of 2025, SK Hynix held 61% of the global HBM market, far ahead of Samsung Electronics’ 17%, making it a key force reshaping South Korea’s semiconductor industry.

SK Hynix shares closed 5.6% higher on June 22, 2026, lifting its market capitalization to 2,080.4 trillion won, or about $1.35 trillion. That surpassed Samsung Electronics’ 2,066.7 trillion won valuation excluding preferred shares, ending Samsung’s reign as South Korea’s most valuable company since 2000. SK Hynix also plans to issue about $27 billion of American depositary receipts on Nasdaq as early as mid-to-late July.

Generative AI has fueled demand for high-bandwidth memory (HBM) and server chips, putting Samsung Electronics and SK Hynix at the center of the global AI supply chain. Hedge funds are bullish on South Korea’s leadership in the memory market, betting that AI investment can continue to generate steady cash flow. Semiconductor stocks have consequently become the main engine driving South Korean equities higher.

Since the start of 2026, shares of Samsung Electronics and SK Hynix have risen 128% and 188%, respectively, helping the KOSPI surge about 80% and break above 8,000 for the first time. As South Korean retail investors chase the rally, margin-financing balances have climbed to 36 trillion won, boosting brokerage interest income while underscoring growing leverage and the rising risk of buying at elevated prices.

Generative AI is driving data-center expansion, making high-bandwidth memory, or HBM, a critical GPU component. Young South Korean investors are consequently shifting funds from cryptocurrencies into Samsung Electronics and SK hynix, betting on the companies’ positions in the global memory supply chain. The trend echoes Taiwanese investors’ longstanding enthusiasm for holding TSMC shares.

HBM demand has climbed rapidly in recent months, channeling market funds into Samsung Electronics and SK hynix and driving significant gains in both companies’ shares. The Korea Exchange’s KOSPI also surpassed 6,000 points for the first time, propelled by the AI chip rally and reflecting a clear shift among South Korean retail investors toward the AI hardware supply chain.