Key Highlights
- The KOSPI index in South Korea plunged more than 6% during Friday trading, touching an intraday bottom of 6,650.41 points
- Major chipmakers SK Hynix and Samsung Electronics saw declines ranging from 6% to 10%, driving the market downturn
- Concerns about excessive AI spending emerged after Alphabet’s quarterly results showed negative free cash flow
- Fresh U.S. tariffs of 12.5% on Korean exports intensified selling pressure until a 15% maximum was later confirmed
- Hyundai Motor shares tumbled 8% following disappointing second-quarter financial results
Seoul’s benchmark KOSPI index experienced a dramatic selloff on Friday, plummeting more than 6% as semiconductor stocks led a widespread decline. The market rout came amid growing uncertainty around artificial intelligence capital expenditures and renewed trade friction with the United States.
During intraday trading, the index plunged to a session low of 6,650.41 points. The market managed to pare some losses, climbing back to 6,751.49 following official confirmation from Seoul that Washington would respect a previous trade agreement limiting tariffs to 15%.
The Korean market decline mirrored weakness throughout the Asia-Pacific region. Japan’s Nikkei 225 shed 3% of its value, while Hong Kong’s Hang Seng index declined more than 1% and the Shanghai Composite retreated 0.87%. Growing military tensions between Washington and Tehran further weighed on regional market sentiment.
Semiconductor Sector Bears the Brunt
The day’s steepest losses came from Korea’s semiconductor giants [[LINK_START_2]]Samsung Electronics[[LINK_END_2]] and [[LINK_START_3]]SK Hynix[[LINK_END_3]]. Shares of both companies plummeted between 6% and 10% during Friday’s session.
The semiconductor selloff came on the heels of a difficult trading day for American technology stocks. Recent quarterly earnings from Alphabet and Tesla revealed both firms were committing substantial resources to artificial intelligence development, prompting investors to question the long-term viability of such aggressive spending.
[[LINK_START_4]]Alphabet’s[[LINK_END_4]] financial disclosure proved especially alarming. The tech giant reported negative quarterly free cash flow for the first time in its history while simultaneously increasing its projected capital expenditure guidance for the full year.
This development rattled investors who have been seeking tangible evidence that AI investments will generate meaningful returns. The growing anxiety centers on whether massive AI spending is eroding corporate profitability rather than enhancing it.
Both Samsung and SK Hynix had experienced strong performance over the previous year, benefiting from robust AI-fueled demand for their memory chip products. However, this same exposure left them vulnerable when market sentiment turned negative.
The decline was further magnified by Korean leveraged exchange-traded funds linked to these semiconductor companies, which exacerbated the day’s price swings.
Automaker Weakness and Tariff Uncertainty Compound Losses
[[LINK_START_5]]Hyundai Motor[[LINK_END_5]] shares dropped 8% following the release of weaker-than-anticipated second-quarter financial results. The automaker has already been grappling with U.S. trade tariffs as a challenge in recent quarters, and the latest tariff announcement darkened the company’s outlook further.
Washington’s announcement of a 12.5% tariff targeting South Korea and several other nations hit export-dependent industries particularly hard. The pressure eased somewhat after Seoul later obtained confirmation of the 15% tariff ceiling for the day.
The KOSPI index ultimately finished the trading session at 6,690.62, representing a 5.72% decline for the day.
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