AI Overcapacity Concerns Trigger Sell-off in Chip Stocks, South Korea's "National Wealth" Faces Revaluation

Global AI chip market is undergoing a sharp adjustment in expectations.

As concerns rapidly escalate over overheated investment in AI infrastructure and peak computing power demand, global chip stocks have recently faced a massive sell-off. In Asian markets, leaders such as Samsung Electronics, SK Hynix, and Kioxia have fallen 21% to 30% from their June highs, with the valuation expansion driven by the AI frenzy now facing a comprehensive test.

The trigger for the shift in market sentiment is the news that Meta is reportedly planning to sell some of its AI computing resources. Although the related reports still invite varying interpretations, investors are beginning to reassess the logic behind tech giants' continued heavy capital spending on AI over the past two years: if computing power supply begins to exceed demand, the core narrative supporting the sustained rise of global chip stocks may show cracks.

Compared to the U.S. market, this adjustment is particularly sensitive for South Korea. Samsung Electronics and SK Hynix are not only the largest weighted stocks in the South Korean stock market but also key pillars of the country's exports and corporate earnings. Once the AI investment cycle cools down, the South Korean capital market and even the macroeconomy may come under pressure first.

AI trades begin to cool, chip stocks face widespread profit-taking

After the AI rally continued to surge in the first half of the year, the chip sector has seen massive profit-taking.

Data shows that Samsung Electronics has fallen about 21% from its June high, with the stock price dropping back to the level at the end of May; SK Hynix has accumulated a decline of 25%; Japan's 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 over 10% overnight, with funds generally withdrawing from key targets in the AI supply chain.

Previously, global capital was almost continuously flowing into the AI supply chain, with concepts such as memory chips, HBM, and high-performance computing becoming some of the most crowded trades in the market. As stock prices rose rapidly, valuations also expanded, and now the market is beginning to reassess whether this round of AI investment has already overhyped future growth.

Meta news triggers market to reassess AI capital spending

What truly changed market risk appetite is the concern over AI computing power demand.

Recently, news that Meta plans to sell some of its AI computing resources has attracted significant market attention. Although this move does not necessarily mean a broad slowdown in AI investment, for the chip sector, which has been built on expectations of continuous capacity expansion and continued procurement, any signal of weakening marginal demand will be quickly amplified by the market.

Investors are beginning to worry whether the pace at which global tech giants have been continuously building AI data centers and 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, stated:

AI-related stocks had already accumulated huge gains, and market expectations were very high, so periodic profit-taking was almost inevitable. Any negative news could become a catalyst for fund outflows.

What the market truly fears is not a single event, but whether the AI capital spending cycle is entering a phase of marginal slowdown. Once the market begins to believe that computing power supply is growing faster than demand, the logic that has supported high valuations in the chip sector will also be challenged.

South Korea becomes one of the markets with the largest risk exposure in the global AI adjustment

Compared to other markets, South Korea is facing a more significant chain reaction.

Over the past six months, the South Korean stock market has become one of the biggest beneficiaries of the global AI rally. Samsung Electronics and SK Hynix have driven the Korea Composite Stock Price Index (Kospi) steadily higher, and the chip industry has become a core asset supporting South Korean household wealth and capital market performance.

Now, with both giants entering a correction phase, South Korea's heavy reliance on AI trades is fully exposed.

What is even more noteworthy is the impact on the real economy.

South Korea is one of the world's largest exporters of memory chips, with semiconductors consistently accounting for a significant share of the country's total exports and serving as an important source of corporate earnings, fiscal revenue, and economic growth. If global AI infrastructure investment cools down and further transmits to memory chip demand and prices, South Korea's exports, corporate profits, and even economic growth could face a chain reaction.

In other words, this is not just a tech stock adjustment; it means that South Korea's most important 'national asset'—the semiconductor industry—is undergoing a new round of valuation reassessment. Whether the AI investment logic can continue to support the global chip cycle will also become the most critical observation variable in the global tech market over the coming months.

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