South Korean AI stocks slump as memory-chip optimism wanes

South Korea’s AI-focused stocks have entered a period of weak demand, with turnover falling sharply and foreign investors withdrawing billions of dollars. The sector’s fortunes are heavily tied to Samsung Electronics and SK Hynix, whose combined weight exceeds half of the Kospi, but concerns about the durability of the memory-chip cycle are eroding confidence. Recent profit gains at Samsung have not prevented its shares from slipping, and large buyback programmes by the two chipmakers have saturated market demand for shares.

Retail participation has dwindled, margin loan levels have steadied below recent peaks, and investor deposits have dropped markedly. While some investors view the lower valuations as buying opportunities, many are shifting attention to Taiwan, where broader semiconductor exposure and stronger earnings outlook are attracting capital.