South Korea’s stock market index, the KOSPI, triggered its second circuit breaker in a single week amid the AI chip trade, rattling global markets.

Friday’s 8.19% intraday plunge forced another 20-minute halt and dragged Wall Street, Tokyo, and Tokyo-listed SoftBank sharply lower.

The cascade is now the clearest sign that AI chip exposure has become the central risk factor for global equities.

What Triggered the Latest KOSPI Halt

A circuit breaker is an emergency market mechanism that pauses trading when an index drops too sharply within a short timeframe. The Korea Exchange triggered one on Friday at 12:10 p.m. local time after the KOSPI remained more than 8% below the previous close for at least one minute.

The benchmark plunged 731.97 points, sinking to 8,198.33 at the moment of suspension. As a result, traders watched in real time as the index logged its fifth circuit breaker of 2026.

Furthermore, this marked only the second time both a sell-side sidecar and a circuit breaker were activated in the same session.

The KOSPI closed at 8,411.21, down 5.81% on the day. Samsung Electronics fell 5.30% to 339,500 won (~$248), while SK Hynix dropped 8.36% to 2.673 million won (~$1,950).

Both chipmakers account for roughly half of the index’s market capitalization, amplifying the broader index move significantly.

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Capital outflows hit hard. Foreign investors dumped a net 4.62 trillion won (~$3.4 billion) across the session. Institutional investors followed with another 3.78 trillion won (~$2.8 billion) in sales.

However, retail investors took the opposite side, buying a net 8.19 trillion won (~$6.0 billion) as they doubled down on the long-term AI infrastructure thesis.

The episode lands just three trading days after Tuesday’s 9.99% crash. That earlier session triggered the first circuit breaker of the week, sending Samsung and SK Hynix down more than 12% each.

As a result, KOSPI volatility has now reached levels rarely seen since the index’s inception.

How the AI Chip Trade Is Driving Global Risk

The catalysts for Friday’s selloff were a layered mix of memory chip concerns. Worries about slowing demand and pricing tensions between Apple and Micron drove early selling.

Furthermore, renewed concerns about AI infrastructure costs and a potential delay in OpenAI’s IPO added fuel to the cascade.

Profit-taking compounded the move sharply. The KOSPI had bounced 5% on Wednesday and another 3% on Thursday after Tuesday’s initial crash. As a result, passive funds tracking semiconductor-heavy indexes rotated out aggressively, generating waves of forced selling across every chip-related name in Seoul.

The ripple effects reached well beyond Korea. The Nikkei 225 plunged 4.15% on Friday to 69,360.83, completely wiping out Thursday’s gains and surrendering the 70,000 level.

Moreover, SoftBank dropped more than 12% in Tokyo, pressured by reports of the OpenAI IPO timeline circulating across global wires.

Wall Street felt the move clearly. The Nasdaq Composite closed Friday with its fifth consecutive losing session. The index fell 4.6% on the week. Furthermore, the S&P 500 lost almost 2% across the same period, while the Philadelphia Semiconductor Index extended a global rout that had already swept Asia and Europe.

Analyst commentary frames the situation as a concentration story. With Samsung and SK Hynix representing more than half of the KOSPI, every move in memory chips becomes an index-level event.

As a result, KOSPI-linked products now behave less like a Korean equity gauge and more like a pure proxy for AI chip sentiment.

The wider takeaway is structural. AI infrastructure spending, memory pricing, and the timing of major IPOs now drive the entire global risk picture.

Until the AI chip trade finds a steadier footing, circuit breakers in Seoul will keep coming as the first warning signal for every downstream market.

Source: BeInCrypto