AI overcapacity concerns trigger chip stock sell-off, South Korea’s "national wealth" faces revaluation

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The global AI chip market is undergoing a sharp correction in expectations.

As concerns about overheated investment in AI infrastructure and the peaking of computing power demand are rising rapidly, global chip stocks have recently experienced large-scale selloffs. In the Asian market, leading companies such as Samsung Electronics, SK Hynix, and Kioxia have fallen 21% to 30% from their June highs, as the valuation expansion driven by the AI boom is now being fully tested.

The catalyst for this shift in market sentiment was the news that Meta plans to sell part of its AI computing power resources. Although the relevant news has sparked different interpretations, investors have begun to re-examine the logic behind tech giants' continued ramp-up in AI capital expenditure over the past two years: if computing power supply begins to outpace demand, the core narrative supporting the continued rise in global chip stocks may begin to unravel.

This adjustment has had a particularly sensitive impact on Korea compared to the U.S. market. Samsung Electronics and SK Hynix are not only the largest weighted stocks in the Korean stock market, but also important pillars of Korea's exports and corporate profits. Should the AI investment cycle cool down, Korea's capital market and even its macroeconomy may be the first to feel the pressure.

AI trading begins to cool down, chip stocks collectively face profit-taking

After the AI boom soared in the first half of the year, the chip sector has seen large-scale profit-taking.

Data shows that Samsung Electronics has dropped about 21% from its June high, with its share price falling back to the level at the end of May; SK Hynix has declined by 25%; Japanese memory chip maker Kioxia has retreated about 30% from its peak.

The U.S. market has not been spared either. Micron and SanDisk both plunged more than 10% overnight, with core stocks on the AI supply chain broadly experiencing capital outflows.

Previously, global funds almost continuously flowed into the AI supply chain, with memory chips, HBM, and high-performance computing becoming among the most crowded trades in the market. With stock prices rising rapidly, valuations have also soared. Now, the market is reassessing whether this round of AI investment has already priced in future growth ahead of time.

Meta news triggers market reassessment of AI capital expenditure

What truly changed the market's risk appetite was concern over AI computing power demand.

Recently, news of Meta planning to sell part of its AI computing power resources has attracted significant market attention. Although this move does not necessarily indicate an across-the-board slowdown in AI investment, for the chip sector—already built on expectations of continuous expansion and persistent procurement—any signal of weakening demand at the margin is quickly amplified by the market.

Investors are starting to worry whether the pace of global tech giants expanding AI data centers, purchasing GPUs and HBM memory over the past two years has already outstripped actual commercial demand.

Joshua Crabb, Head of Asia-Pacific Equities at Robeco, commented:

AI-related stocks have already accumulated tremendous gains, and market expectations are very high, so cyclical profit-taking is almost inevitable. Any negative news could be a catalyst for funds to exit.

The real concern for the market is not a single event, but whether the AI capital expenditure cycle is entering a stage of marginal slowdown. Once the market begins to believe that computing power supply is growing faster than demand, the logic supporting high valuations in the chip sector will be challenged.

Korea is one of the highest-risk markets in the global AI adjustment

Compared to other markets, Korea is facing an even greater chain reaction.

In the past six months, the Korean stock market was almost one of the biggest beneficiaries of the global AI boom, with Samsung Electronics and SK Hynix driving the Kospi (Korea Composite Stock Price Index) higher, and the chip industry becoming a core asset supporting household wealth and the capital market’s performance in Korea.

Now, as the two industry leaders simultaneously go into adjustment, Korea's heavy dependence on AI trading is being fully exposed.

More importantly, there are real-world economic impacts to note.

Korea is one of the world’s largest memory chip exporters, with semiconductors long accounting for a significant portion of Korean exports and being an important source of corporate profits, fiscal revenue, and economic growth. If global AI infrastructure investment cools off and this further passes on to memory chip demand and prices, Korean exports, corporate profits, and even economic growth may all be affected in a chain reaction.

In other words, this is not just a round of adjustments in tech stocks, but also a new round of valuation reassessment for Korea’s most important "national wealth"—the semiconductor industry. Whether the AI investment logic can continue to support the global chip cycle will also become the most crucial variable to watch in the global tech market in the coming months.

Risk Warning and DisclaimerThe market has risks, and investment needs caution. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situation, or needs of any particular user. Users should consider whether any opinions, views, or conclusions in this article are applicable to their individual circumstances. Investment decisions based on this are at your own risk. ```