South Korean stocks plunged on Tuesday, with the Kospi falling as much as 10.5% to its lowest level since April. Trading restrictions were briefly imposed as the decline widened. The semiconductor sector was the focus of the sell-off, and major Asian stock indices also weakened.
Chip stocks under pressure
Market concerns are growing that accelerated capacity expansion by Chinese AI companies and semiconductor manufacturers could depress global chip prices and squeeze profit margins and market share. South Korean chip stocks are bearing the brunt of this, with investor sentiment noticeably weakening.
The launch of CXMT has attracted attention.
These concerns intensified after Changxin Memory Technologies Co., Ltd. (CXMT) listed on the Shanghai Stock Exchange's STAR Market. The company's shares surged approximately 466% on its first day of trading, raising at least $8.6 billion through its IPO. CXMT manufactures DRAM chips used in mobile phones, computers, servers, and AI systems.
Asian markets fell in unison.
The sell-off wasn't limited to South Korea. Japan's Nikkei 225 index fell by about 4%, Taiwan's Weighted Index fell by 3.9%, the Shanghai Composite Index fell by 1%, and Hong Kong's Hang Seng Index declined slightly.
