Samsung, SK Hynix fall over 4% as DeepSeek spooks markets
What's the story
South Korean stocks have resumed their downward trend, with the benchmark Kospi index falling as much as 3.2%. The decline was led by major chipmakers Samsung Electronics and SK Hynix, both of which saw their shares drop over 4% before trimming losses. The fall comes after the release of a new AI model by China's DeepSeek, which the start-up claims requires four times less memory per token.
Market impact
US chipmakers continue losing streak for 8th session
US chipmakers also continued their losing streak for the eighth consecutive session. The losses have been driven by investor concerns over the skyrocketing costs associated with artificial intelligence (AI) development.
Kang DaeKwun, CEO at Life Asset Management, said there are too many uncertainties to determine a bottom for Korean stocks. He cited uncertainties over funding for US companies' AI projects as a major contributor to market jitters.
Performance review
Kospi index's worst weekly performance since October 2008
The Kospi index has witnessed its worst weekly performance since October 2008. However, it is still up over 30% this year, thanks to aggressive AI spending that pushed memory prices to all-time highs.
The current market situation highlights the volatility and uncertainty surrounding the tech industry amid rapid advancements in artificial intelligence technology.