South Korea’s KOSPI Nears Bear Market as Chip Stocks Tumble Despite Samsung’s Record Profit

8 Jul 2026 , 12:40 PM

South Korea’s benchmark KOSPI index was on the verge of entering a bear market on Wednesday after extending its recent losses, with a sharp sell-off in semiconductor stocks outweighing record quarterly earnings from Samsung Electronics.

The benchmark index fell as much as 5.4% during the session, taking it more than 20% below its record high reached in June. The decline comes as investors question whether the artificial intelligence (AI)-driven rally in South Korean technology stocks can continue after months of exceptional gains.

KOSPI Falls More Than 20% From Record High

The KOSPI dropped to an intraday low of 7,222.60, marking a decline of more than 20% from its all-time high of 9,385.59 recorded on June 19.

If the benchmark closes at these levels, it will officially enter a bear market, a term used when an index or asset declines at least 20% from its most recent peak.

The latest decline reflects growing caution among investors following a stellar rally earlier this year.

Samsung Electronics Drops Despite Record Quarterly Profit

Shares of Samsung Electronics fell as much as 6% even after the company reported a record-high second-quarter profit.

While earnings reached a new high, revenue fell short of elevated market expectations, prompting investors to question whether AI-driven demand can continue supporting the company’s rapid growth.

The stock had more than doubled over the past year, making it vulnerable to profit booking following the earnings announcement.

SK Hynix Extends Losses

The weakness spread across South Korea’s semiconductor sector.

SK Hynix declined as much as 5% after falling 6% in the previous trading session, adding further pressure on the benchmark index.

The sharp correction highlights changing investor sentiment after months of strong gains in AI-related semiconductor stocks.

High Leverage Amplifies Market Volatility

Analysts believe selling pressure has been intensified by high levels of leverage in semiconductor stocks.

The launch of several leveraged and inverse exchange-traded funds (ETFs) since May has increased market volatility, accelerating declines during periods of heavy selling.

As leveraged positions unwind, price swings have become more pronounced across technology shares.

Apple Report Adds to Investor Concerns

Investor sentiment was further weakened by reports that Apple is considering sourcing memory chips from Chinese suppliers amid supply shortages among South Korean manufacturers.

The development has raised concerns that increased competition could pressure memory chip prices in the medium term, potentially affecting the profitability of South Korea’s leading chipmakers.

AI-Linked Stocks Also Under Pressure

Selling extended beyond semiconductor companies.

Hyundai Motor fell 4.7%, reversing part of its strong rally over the past year.

The automaker had surged around 120% over the previous 12 months, supported by its partnerships with Nvidia and its investments in physical AI technologies.

The decline suggests investors are reducing exposure across AI-linked sectors rather than limiting selling to chipmakers alone.

AI Valuation Concerns Drive Market Correction

The KOSPI has been among the world’s best-performing stock indices in 2026, fuelled largely by optimism surrounding artificial intelligence and semiconductor demand.

However, recent trading sessions have seen increasing volatility as investors reassess whether the sector’s elevated valuations remain justified.

Strong corporate earnings have so far failed to ease concerns that AI-related stocks may have run ahead of their fundamentals, prompting widespread profit booking across the market.