Key Highlights

  • South Korea's Kospi benchmark index fell 10% on June 23, its sharpest single-session decline in years, led by Samsung Electronics and SK Hynix falling more than 12% each.
  • The selloff reflected a combination of global risk aversion, concerns about debt-funded AI capital spending sustainability, and forced selling from leveraged ETF rebalancing.
  • US memory names Micron Technology and SanDisk fell 13.18% and 13.64% respectively, with the contagion spreading across the entire semiconductor supply chain.
  • The Philadelphia Semiconductor Index declined nearly 8% on the day, one of its largest single-session drops of the year, as AI infrastructure spending concerns intensified.

 

South Korea's Kospi benchmark equity index fell 10% on June 23, 2026, in one of its sharpest single-session declines in recent memory, as concerns about the sustainability of AI-driven capital spending combined with leveraged ETF rebalancing mechanics to trigger a global semiconductor market shock.

Samsung Electronics and SK Hynix, the two largest memory chip producers by revenue, each declined more than 12% in Seoul trading. Both companies had been major beneficiaries of the AI-driven high-bandwidth memory demand cycle, with SK Hynix having surpassed Samsung in market capitalisation in recent months on the back of its leading position in HBM3E memory used in Nvidia's AI accelerators. The scale of that prior re-rating left both stocks with significant embedded positioning risk heading into any macro de-risking event.

The surface-level catalyst was news that Alphabet had lost two senior AI scientists, which investors interpreted as a signal of potential disruption to hyperscaler AI research infrastructure investment. More structurally, concerns had been building about whether the pace of AI data centre construction, funded in part by debt at major cloud providers, was sustainable at current spending rates. These concerns had been amplified by the Federal Reserve's increasingly hawkish posture under newly appointed Chair Kevin Warsh.

The Korean selloff triggered immediate contagion in US markets. The Philadelphia Semiconductor Index dropped nearly 8%, with US memory names Micron Technology and SanDisk falling 13.18% and 13.64% respectively. Semiconductor equipment suppliers including Lam Research, KLA Corp, and ASML declined sharply, while AI infrastructure names from Marvell Technology to Vertiv Holdings experienced double-digit losses.

Leveraged semiconductor ETF rebalancing amplified every directional move. Funds including SOXL, the 3x leveraged semiconductor ETF, were forced to sell underlying holdings to maintain their target exposure ratios on a large down day, creating a feedback loop that exaggerated the decline well beyond what fundamental reassessment alone would have produced.