South Korea’s benchmark Kospi index closed 10.8% lower on Tuesday, its steepest single-day fall in months, after trading was temporarily halted by a circuit breaker designed to stem panic selling. The sell-off was led by the country’s two largest chipmakers: Samsung Electronics and SK Hynix each slumped by more than 13%, amplifying the index’s decline because the pair account for roughly 40–50% of the Kospi’s market capitalisation. The rout spilled across Asian markets, with Japan’s Nikkei 225 closing almost 4% down and shares in flash-memory maker Kioxia falling as much as 18%.

The plunge followed a 5% drop in Nvidia shares overnight after a report that the company could provide up to $250bn in financing guarantees for an OpenAI data-centre project, which analysts said stoked fears that AI leaders are over-extending themselves to fund their own customers. Simultaneously, Chinese state-backed firm Shanghai Yuliangsheng was reported to have begun industrial production of immersion deep-ultraviolet (DUV) lithography machines, a segment long dominated by Dutch supplier ASML, whose shares lost 8.5%. The news reignited concerns that Chinese memory-chip makers could accelerate capacity expansion, intensifying competition in the global market.

Adding to the pressure, Chinese memory-chip maker CXMT saw its shares surge nearly 470% on their Shanghai debut on Monday, underscoring growing investor enthusiasm for China’s domestic semiconductor sector and the competitive threat it poses. “CXMT is going to be one of the big index weights. As that’s going on, people have to dump more of their existing stocks,” said Hao Hong, chief investment officer at Lotus Asset Management in Hong Kong. SK Hynix’s US-listed shares tumbled 7.5% to fall below its $149 Nasdaq IPO price for the first time since listing this month, highlighting the swift reversal in sentiment toward a key Nvidia supplier.

Market participants view the sell-off as a correction driven by stretched valuations and rising caution ahead of a heavy week of earnings from mega-cap tech firms. “We seem to be at the despair part of the selloff, where tech investors are rushing for the exit,” said Matt Simpson, a senior analyst at StoneX. Attention now turns to quarterly results from SK Hynix on Wednesday and from US tech giants, which could either validate or further undermine the investment narrative for AI infrastructure.