SK Hynix shares fell 7.74% and KOSPI slipped 1.98% as Korean chip stocks dropped on worries that the new Democrat-led Congress will tighten AI rules.
SK Hynix shares slid 7.74% to 1.288 million won on Thursday as Korean chip stocks were swept lower. The selloff came after US Democrats won control of Congress, rekindling worries that artificial-intelligence (AI) rules could be tightened.
On Wednesday, the Dow gained 3%, but the Philadelphia Semiconductor Index fell 3.1% to a six-month low. For holders of South Korea's two largest memory-chip makers, that divergence keeps US AI policy a live risk.
By 9:15 a.m., the Korea Composite Stock Price Index (KOSPI) was down 1.98% at 5,570.99.
Samsung Electronics had dropped 5.50% to 206,000 won by 10:01 a.m., according to TradingView data.
The selloff reflects fears that the Democrat-controlled Congress will clamp down on AI data centers, the facilities that underpin demand for the high-bandwidth memory (HBM) chips supplied by SK Hynix and Samsung.
Traders may simply be pricing in a slower data center buildout, one interpretation holds.
A USC Annenberg survey of 2,980 adults found that 78% think government does too little on data centers, including 69% of Republicans.
The 1,500-point Dow advance arrived as markets priced in a divided government. Barclays said the result will probably bring legislative gridlock, LBC reported.
The Democratic majority takes hold when lawmakers are sworn in on Jan. 3, WBUR reported. Yonhap, by contrast, cited no specific bill as the trigger for the chip selloff.
TradingView figures show SK Hynix down 29.86% over the past month and Samsung down 26.39%, while SK Hynix remains up 97.70% for the year to date.
SK Hynix closed at 1.487 million won on Oct. 28 following record quarterly sales of 104.6 trillion won. The current price is roughly 13% below that close.
On Oct. 25, Goldman Sachs lowered its KOSPI target to 9,000 from 12,000. The bank reckoned chip valuations implied a 65% fall in 2027 sector earnings and described that pricing as excessively pessimistic.
Korean memory earnings rely heavily on AI data center demand, so US rules could drag on chip valuations. If Congress advances no legislation after Jan. 3, the selloff would look overdone.
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US stocks surged on Wednesday after Democrats won Congress, with investors betting on gridlock to curb policy risks.
Goldman says states set to tighten data centre rules account for 45% of planned US capacity, but expects any pauses to be short-lived.
After the Democratic midterm sweep, Fundstrat's Tom Lee expects tech stocks to climb 15%-20% as hedge funds rebuild exposure; data center stocks fell Wednesday.