A Chinese memory advance drops the Kospi 5.46% and extends the chip selloff

South Korea’s Kospi plunged 5.46% as doubts about the semiconductor supercycle built on demand from AI data centres sent major Korean chipmakers lower³. The trigger was a report that China’s CXMT had made progress on a denser DRAM chip design⁵. Samsung, SK Hynix and SoftBank fell together, with SoftBank particularly sensitive to questions over whether AI revenues can justify its capital commitments⁶.

South Korea’s market, heavily exposed to the two chip giants, led a decline across Asian technology shares¹⁰. In the United States, stocks fell for a second consecutive session as doubts about AI’s ability to power corporate earnings much further coincided with heavier fuel charges supporting lofty Treasury yields¹. Nasdaq futures had pointed lower before the open as the global AI selloff intensified⁷. The previous day had already brought a hard session for chip stocks.

CXMT’s advance sparked profit-taking in semiconductors while mixed bank earnings and a flattening yield curve kept the main indexes pinned⁴. The selloff pulled European stocks back from a one-week high⁹.

Why it matters to investors

This is a repricing driven by competition rather than by any change in demand. Memory chips are the part of the AI build-out where Korean producers have the most pricing power, and a credible Chinese entrant in denser DRAM attacks that position directly^3,5. Elon Musk, whose SpaceX shares dropped 4% on the day, framed the risk in manufacturing terms: when China figures out how to make a product, their output follows⁸.

The move also shows how far the AI trade now reaches beyond chipmakers. SoftBank fell with the Korean names because its value rests on the same assumption about future AI revenue⁶, and SpaceX was marked down alongside them as the memory trade unwound⁸.

What to watch

Bond markets moved the other way. US Treasury and eurozone government bond yields retreated, helped by a drop in Brent crude prices and the pullback in artificial intelligence stocks². That is the classic rotation out of equity risk, and it sits awkwardly with the account of the US session in which heavier fuel charges were supporting high yields¹.

The next test is US inflation data, which markets were already looking to when yields fell². Beyond that, investors will want evidence of what CXMT can actually ship and at what volume, since the reported progress is on a design rather than on delivered capacity⁵.