Seoul's benchmark briefly fell below 6,000 and posted its lowest close since July 30, its fifth straight loss. Japan and Taiwan fell about 2%, while Hong Kong edged higher and the Chinese memory maker at the center of the selloff fell too.
South Korea's stock market took the hardest hit as Asia's technology selloff deepened on Tuesday. Not every market in the region followed.
The Kospi closed at 6,035.35, down 5.46%, its lowest close since July 30 and its fifth consecutive decline. At its worst point the index stood at 5,911.11, about 7.4% below Monday's close. Less than an hour into the session, a 5% drop in Kospi 200 futures triggered a sell-side sidecar, which halts program trading for five minutes. It was the first such curb in about two months.
Foreign investors sold a net 1.8 trillion won of Korean shares in the morning session. Samsung Electronics closed down about 7.4% and SK Hynix about 10%.
Who Fell, And Who Did Not
Japan's Nikkei 225 fell 1.82% to 67,777.52, with memory maker Kioxia down about 14%, SoftBank Group about 8% and chip-equipment maker Tokyo Electron more than 5%. Taiwan's main index dropped 1.95%, and Taiwan Semiconductor Manufacturing lost about 1.8%.
Hong Kong moved the other way. The Hang Seng index rose 0.30% to 24,345.22. In mainland China, the CSI 300 lost 0.29%.
ChangXin Memory Technologies, the Chinese DRAM maker whose reported progress on a new memory design was cited as a trigger for the selling in memory stocks, fell as much as 5.3% in Shanghai, to its lowest level since its July listing.
In Europe, ASML fell about 3.3% and Infineon and STMicroelectronics about 5% in early trading. Ahead of the U.S. open, futures on the Nasdaq 100 were about 0.5% lower.
Two Catalysts And A Positioning Problem
The selloff began in U.S. memory stocks on Monday after CXMT described progress on a denser memory-cell design, with a server product targeted for the end of 2026. Separately, Broadcom Chief Executive Hock Tan said on Monday that capital, not chips, may be the biggest constraint on AI growth.
Local fund managers questioned how much the Chinese news changes. Jung In Yun of Fibonacci Asset Management said CXMT "still needs to translate technological progress into commercially competitive production at scale." Ha SeokKeun of Eugene Asset Management pointed to a different concern: "Uncertainty over whether the upcycle can last into 2028 and beyond appears to be weighing on valuations."
Marc Velan, who heads investments at Singapore-based Lucerne Asset Management, read Tuesday's selling as a verdict on crowded positions and pricier money, not on demand for AI. "I wouldn't call this the end of the AI trade," he said. "But Korea could be an early warning of a broader shakeout."
Why Korea Fell Most
Samsung Electronics and SK Hynix carry large weights in the Kospi, which leaves the index heavily exposed to sentiment toward memory chips. That concentration amplifies losses when the outlook for memory turns. Hong Kong's small gain on the same day suggests the selling was focused on markets with large memory and chip-equipment weightings rather than on Asian stocks as a whole.
Market Implications
One reading is that this is a valuation reset in a crowded trade. CXMT has not shown that it can produce competitive chips at volume, its own shares fell, and the selling looks like investors taking profit in the region's most concentrated AI market.
A second reading is that investors are starting to doubt how long memory prices and margins can stay this high. A credible Chinese competitor and a rising cost of capital both shorten the expected life of the upcycle, and Korea is where that doubt shows up first.
What To Watch
The next read on chip demand comes from Europe and Taiwan this week, with ASML's results due Wednesday and TSMC's on Thursday. Whether overseas investors keep selling Korean shares will show if Tuesday was a pause or a turn.