Korean stocks plummet, global funds withdraw: Have the fundamentals of semiconductors really changed?

Title: Korean Stocks Plunge, Global Funds Exit: Have the Semiconductor Fundamentals Really Changed?

Author: Rhythm BlockBeats

Source:

Repost: Mars Finance

TL;DR

The Korean stock market just experienced its most violent crash of the year.

After opening on Monday, the KOSPI briefly fell nearly 9%, triggering the circuit breaker. Samsung Electronics and SK Hynix both took heavy hits, and the market began to discuss whether the AI bull market has reached a turning point.

But while market panic selling was happening, another event was unfolding in Seoul.

Huang Renxun visited Korea over the weekend, not only meeting with SK Group Chairman Choi Tae-yoon but also announcing that NVIDIA and SK Hynix had reached a new multi-year cooperation agreement to jointly develop a new generation of memory products for AI data centers. At the same time, he also engaged in intensive discussions with Korean tech companies like Samsung Electronics, LG, and Naver, reiterating that AI infrastructure development is still in its early stages.

As a result, a contrasting picture emerged in the market.

On one side, Korea’s AI leaders faced concentrated selling; on the other, the most core clients in the AI supply chain continued to strengthen their ties with Korean suppliers.

If AI demand were truly collapsing, Huang Renxun wouldn’t need to fly to Seoul specifically to reinforce cooperation.

This is also why new debates have started in the market today.

Is the Korean market preemptively reflecting an AI cycle peak, or is it experiencing a typical high-level deleveraging?

Korea Becomes One of the Most Sensitive Markets for Global AI Trading

Although the recent decline happened in Korea, the trigger was not from Korea itself.

Last Friday, the US semiconductor sector experienced a sharp sell-off. The Philadelphia Semiconductor Index recorded one of the largest single-day drops in recent years, with companies like Broadcom and Micron, related to AI infrastructure, also pulling back. Subsequently, the market began reassessing the risk exposure of high-valuation tech stocks.

Korea became the most directly affected market.

Over the past year, the core driver of Korea’s stock market rise wasn’t the domestic economy but AI data center construction, HBM demand growth, and NVIDIA’s industry chain expansion.

Samsung Electronics and SK Hynix together hold a very high weight in Korea’s market. When global funds want to bet on AI infrastructure, Korea is one of the easiest entry points; when funds start reducing AI positions, Korea naturally becomes one of the markets easiest to sell off.

Therefore, the decline in Korea’s market was much larger than that of the US market itself.

In a sense, Korea is no longer just a national index but more like a large AI memory ETF.

Huang Renxun’s Korea Visit Contrasts Sharply with Market Panic

If the market’s panic stems from valuation concerns, then the biggest positive news over the weekend came from the industry chain itself.

Huang Renxun’s main goal in visiting Korea was very clear: to further strengthen NVIDIA’s cooperation with Korea’s AI supply chain. The most notable news was NVIDIA’s announcement of a new multi-year cooperation agreement with SK Hynix. Over the past two years, HBM has become one of the most critical components for AI servers, and SK Hynix is currently one of the biggest beneficiaries.

This is why the market paid close attention to this cooperation.

In recent months, as AI infrastructure construction scaled up, concerns grew that HBM demand growth might be peaking. But Huang Renxun’s visit now signals the opposite. If NVIDIA believed AI data center construction was nearing its end, there would be no need at this point to continue strengthening long-term relationships with suppliers.

From an industry chain perspective, there’s no evidence yet that AI demand has suddenly disappeared.

The most interesting part of the past two days is here. The capital market is expressing concern over AI sector valuations through stock prices, while the core companies in the industry chain are still discussing expansion and cooperation plans for the coming years. There remains a clear gap between the prices the market assigns and the signals industry players are sending.

The AI Bull Market Is Entering the Profit Pool Reassessment Stage

This is also the biggest current disagreement.

Over the past year, the market has operated on a very simple logic: AI demand is growing. So NVIDIA’s stock, Micron’s stock, SK Hynix, Samsung Electronics—anything related to AI—almost all saw valuation increases.

But as the sector’s gains expanded, the market is now entering a second phase.

Investors are no longer satisfied with the story “AI will grow,” and are starting to ask another question: who will ultimately benefit from the profits created by AI growth? In recent months, from Rubin’s server memory adjustments, to Broadcom’s earnings report reactions, to this Korean market plunge, it all fundamentally reflects the same issue—the market is beginning to dissect the AI profit pool.

SK Hynix benefits from HBM; Samsung Electronics is also布局 HBM, DRAM, and advanced packaging; Micron benefits more from overall memory upgrades in AI servers. Although all are part of the AI industry chain, their profit sources and pricing power differ.

In the past, the market was willing to value the entire sector with expansion expectations, but now funds are starting to scrutinize whether these profits can truly be realized.

This is why even a supply chain news, an earnings guidance, or a capex adjustment can trigger significant sector-wide volatility. The focus of market trading has shifted: rather than whether AI will continue to grow, investors care more about who will ultimately report the profits.

Korean Stocks’ Direction Is Not Decided by Korea

In the coming weeks, what will truly determine Korea’s market direction are still NVIDIA’s orders, HBM supply and demand, and cloud service providers’ capital expenditure.

If these data points weaken, this plunge could just be the beginning of a larger valuation adjustment.

But if data center construction, GPU shipments, and HBM procurement continue to grow strongly, Monday’s circuit breaker might just be a concentrated clearing of crowded trades.

At least for now, the prices the market assigns and the signals from the industry chain are not fully aligned.

On one side, Korea’s AI leaders face the most intense sell-off in recent years; on the other, Huang Renxun is discussing next-generation AI infrastructure with supply chain partners in Seoul.

Who’s judgment is closer to reality? Perhaps an answer will come very soon.