Meta Shock Sends Chip Stocks Reeling as Kospi Closes Below 8,000 After 7.89% Plunge

Kospi closes down 7.89% as fears of excessive U.S. semiconductor investment rattle markets

Meta shock stokes oversupply concerns after mention of "surplus computing resources"

Kosdaq index also falls 6.74%

South Korea's Kospi closed down more than 7% as concerns over excessive U.S. semiconductor investment battered the market.

On July 2, the Kospi ended at 7,648.09, down 655.32 points, or 7.89%, from the previous session. It was the first close below 8,000 since June 11.

The Kosdaq also was hit hard, ending down 6.74% at 866.72.

As the selloff deepened, sell-side sidecars, a market circuit breaker, were triggered on both markets. The mechanism was activated on the Kospi at about 9:07 a.m. and on the Kosdaq at about 12:47 p.m. Those were the 15th and sixth such triggers this year, respectively.

U.S. stocks fell across the board overnight, led by heavy selling in semiconductor shares. Nvidia slipped 1.25%, Broadcom fell 2.23%, Micron Technology dropped 10.57%, AMD lost 6.89%, Intel slid 9.03%, Applied Materials tumbled 9.97%, Lam Research sank 9.71% and SanDisk declined 10.62%. The Philadelphia Semiconductor Index also fell 6.27%.

Sentiment toward chip stocks had already been hurt after Apple CEO Tim Cook complained about higher memory prices, comparing them to a "once-in-a-century flood." Fresh pressure emerged after speculation that Meta could enter the cloud business by using surplus computing resources. That fueled concerns that a possible Meta push into cloud services may reflect overinvestment in AI data centers.

Against that backdrop, Samsung Electronics and SK Hynix, South Korea's two biggest chipmakers, plunged about 9% and 14%, respectively, on July 2. DB HiTek and Hanmi Semiconductor also fell more than 10%. On the Kosdaq, chip equipment stocks also posted steep losses, including Jusung Engineering, down 5.99%, Wonik IPS, down 20.53%, Leeno Industrial, down 7.96%, and EO Technics, down 11.38%.

Foreign investors led the market decline. They were net sellers of 4.372 trillion won on the Kospi, while institutional investors sold a net 2.077 trillion won. Retail investors alone were net buyers of 6.262 trillion won.

On the Kosdaq, retail investors were net buyers of 535 billion won, helping support the index, while institutions and foreign investors were net sellers of 357 billion won and 196 billion won, respectively.

The won weakened slightly. In Seoul trading, the won closed at 1,555.8 per dollar, down 0.9 won from the previous session.

Noh Jung-dong, Hankyung.com reporter dong2@hankyung.com