On November 5, the market capitalization of South Korea, Taiwan, and Japan fell by approximately $550 billion amid a sell-off in shares of chipmakers and AI companies. For investors, this is a signal: betting on the artificial intelligence boom no longer guarantees profits — holders of Samsung and SK Hynix shares and investors in Asian market funds are both incurring losses.
The sell-off poses no less of a threat to businesses: rising memory prices and weak smartphone demand are weighing on electronics manufacturers' revenue, while possible delays in data center construction in the US call future chip orders into question. For those willing to wait, the dip offers a chance to buy shares cheaper, but no one can guarantee that the fall is over.
The sell-off swept three of Asia's largest markets
South Korea was hit hardest: the value of companies on the local exchange shrank by $203 billion. The Taiwanese market lost $182 billion in value, and the index fell by 5%. In Japan, the Nikkei 225 lost 2.1%, costing investors $160 billion.
Among the leaders of the decline were shares of Japanese memory manufacturer Kioxia (−12%), investment group SoftBank (−8%), and Taiwanese chip developer MediaTek (−7%). Shares of Korean Samsung and SK Hynix were also hit.
The sell-off is linked to the convincing victory of the Democrats in the US congressional elections. The voting results heightened Asian investors' fears that AI regulation will become stricter.
Shares of American AI companies and chipmakers also fell in price, although the US market as a whole was rising. This means investors are dumping specifically AI-linked securities, not stocks in general.
KOSPI fell 5.3% after weak Qualcomm and Arm reports
The KOSPI index dropped 5.3% on Thursday. The exchange suspended program selling for five minutes — this is how the sidecar mechanism triggers during sharp market fluctuations. Samsung Electronics shares fell 7.6%, SK Hynix — 9.5%.
The decline affected the entire technology sector. Samsung Electro-Mechanics shares fell 15.3%, and shares of other semiconductor-related companies also dropped noticeably.
The crash is attributed to weak quarterly reports from American chip developers Qualcomm and Arm. Manufacturers are being pressured by falling smartphone demand, rising memory prices, and the "unclear returns" on multibillion-dollar AI investments. Investors also fear that delays in data center construction in the US will reduce future purchases of memory chips.
Samsung and SK Hynix account for about 50% of the index, so the entire Korean market largely depends on their quotations. As a result, the KOSPI ended up 42% below its June peak — at its lowest since April. The bubble in chipmaker stocks is deflating ever faster.
In late October, the KOSPI was rising just as sharply
On October 27, the KOSPI rose 4.53% to 5,717.30 points on a rally in Samsung and SK Hynix, and the exchange then halted program buying for five minutes — the second time in six days. After the first such pause on October 21, the index lost all its gains within two days, and the current crash shows that sharp swings on the Korean market are not yet turning into a sustained upturn.
Already on November 3, the KOSPI closed 38% below its June record, even though SK Hynix said its capacity was sold out through 2029. Long-term contracts make revenue predictable but do not protect quotations — two days later, the index's gap from its peak grew to 42%.
Cryptalist analysis: The sell-off in Asian markets reflects not a rejection of AI but a reassessment of its payback: capital is leaving securities with inflated expectations, not the technology sector as a whole. For the crypto market, this is an ambiguous signal — a contraction in risk appetite weighs on digital assets, but the flow of capital out of overheated AI stocks could boost interest in alternative instruments. Volatility in Asia will remain elevated until there is clarity on memory chip demand and the regulatory agenda in the US.