Asian Stocks Fall as Chip Selloff Hits Kospi and Nikkei: What Happened (July 2026)
Asian Stocks Fall as Chip Selloff Hits Kospi and Nikkei: What Happened (July 2026)
South Korea's Kospi had just finished a second quarter in which it surged 68% on AI demand for memory chips. Then, on Thursday, July 2, 2026, it plunged 7.89% in a single day. SK Hynix lost nearly 15%.
It was the second big wave of chip selling in a week. Here is what happened, what set it off, and what it means for currencies and Indian investors.
July 2: "Black Thursday" in Seoul
| Market / stock | Move | Close | Note |
|---|---|---|---|
| Kospi (Seoul) | -7.89% | 7,648.09 | Sell-side sidecar at 9:07 a.m. |
| SK Hynix | -14.57% | - | Memory chip leader |
| Samsung Electronics | -9.06% | - | Weakest since June 8 intraday |
| Nikkei 225 (Tokyo) | -2.5% | 68,733.15 | Tokyo Electron -7.4% |
| Taiex (Taiwan) | -0.6% | - | TSMC lower |
| Hang Seng (Hong Kong) | Up about 0.9% midday | - | Bucked the trend |
The Kospi broke below 8,000 at the open, and the Korea Exchange triggered a sell-side sidecar, a five-minute halt on program trading, at 9:07 a.m. The index touched 7,616.33 before closing at 7,648.09, down 655.32 points. It had already fallen 2% the day before.
What triggered it: AI overcapacity fears
The trigger came from Wall Street overnight. A Bloomberg report said Meta Platforms was considering a cloud business to sell its excess AI computing capacity. Investors read that as a sign Big Tech may have bought more chips than it needs.
US chip stocks sank: Micron fell 10.57%, Intel 9.03% and AMD 6.89%, dragging the Philadelphia Semiconductor Index down 6.27%. Asian memory makers, the biggest winners of the AI rally, took the hardest hit the next morning.
The first wave: June 26
A week earlier, a different pair of headlines had already shaken the trade:
- Apple raised prices on Macs and iPads to cover soaring memory and storage chip costs, raising fears that higher device prices would slow demand.
- OpenAI IPO delay: a New York Times report said OpenAI might postpone its planned listing until 2027.
On June 26 the Kospi fell as much as 8.19%, triggering a 20-minute circuit breaker, its fifth of the year and second that week, before closing down 5.81% at 8,411.21. SK Hynix fell 8.4% and Samsung 5.3%. In Tokyo, SoftBank Group dropped 12.5% and the Nikkei lost 4.2%. Kioxia fell 11.6% and Taiwan's MediaTek 10%.
Why Korea is hit hardest
SK Hynix and Samsung make up a very large share of the Kospi, so the index behaves like a leveraged bet on AI memory demand. That is why it rose so fast in the second quarter and why it falls so hard on any sign of a slowdown. The Korean won was also weak, trading above 1,500 per dollar, and foreign selling of Korean stocks added pressure. Read how Korea's new 24-hour won market opened days later.
What happened next
The selling did not turn into a crash. By July 6 the Kospi had recovered to 8,051.33. But volatility stayed high through July as markets also had to deal with the US-Iran crisis and rising oil prices. See what US oil stockpile data showed that week.
What it means for India and the rupee
A global tech selloff tends to push foreign investors out of emerging markets, which weighs on currencies like the rupee. USD/INR closed at 95.39 on July 2. Indian IT and electronics stocks also tend to track global tech sentiment. For the RBI's role, read how the RBI's June policy moved USD/INR.
Frequently Asked Questions
Why did Asian chip stocks fall in late June and early July 2026?
First, Apple's price hikes and a report that OpenAI may delay its IPO to 2027 hit AI sentiment on June 26. Then, on July 2, a Bloomberg report that Meta may sell excess AI computing capacity raised fears of chip overcapacity.
How much did the Kospi fall on July 2, 2026?
The Kospi fell 7.89% to 7,648.09, with SK Hynix down 14.57% and Samsung Electronics down 9.06%, according to Xinhua and AP.
Did the Korea Exchange halt trading?
Yes. On June 26 a 20-minute circuit breaker was triggered when the Kospi fell more than 8%, the fifth this year. On July 2 a five-minute sell-side sidecar curbed program trading.
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