KOSPI Plunges 5.3% After US Midterms: Why AI Data Center Fears Hit Korean Chips

South Korea’s benchmark KOSPI fell 5.28% on Thursday, November 5, closing at 5,383.80 — down exactly 300 points. Memory chipmakers led the slide: SK hynix dropped 9.46% and Samsung Electronics 7.57%, after Democrats won control of both chambers of the US Congress and investors began pricing in slower construction of AI data centers.

The irony is hard to miss. Korea’s chip-driven exports are at record highs, yet the stocks behind that boom just fell sharply — not because demand fell, but because investors started to doubt how long it will last.

What happened in Seoul on November 5?

Selling started at the open and never let up. The KOSPI opened at 5,580.09 (−1.82%) and stayed in the red all session, according to The Korea Times. At 10:16 a.m. the exchange triggered a sell-side sidecar — a five-minute pause on program selling that kicks in when futures swing sharply — and the KOSDAQ got one at about 2:27 p.m.

Sources: Korea JoongAng Daily, The Korea Times.

Samsung briefly traded at 199,800 won, its first dip below 200,000 won in more than three months. Because Samsung and SK hynix together make up roughly half of the KOSPI’s market capitalization, a bad day for memory is automatically a bad day for the whole index.

Why would US midterms hit Korean chip stocks?

The chain of logic runs like this: AI data centers need huge amounts of memory, especially high-bandwidth memory (HBM), a stacked type of DRAM that sits next to AI processors. SK hynix and Samsung are two of only three companies in the world that make it at scale. If US data center construction slows, orders for those chips could be pushed back.

Investors worry a new Congress, which takes over in January, could tighten rules on data centers — over power consumption, local grid strain, or AI oversight more broadly. Korea JoongAng Daily cited estimates that show why the market is nervous:

• Goldman Sachs: about 45% of planned new US data center capacity could face temporary project suspensions.
• Mirae Asset Securities: up to 13 gigawatts could be affected — about 8% of new capacity expected by 2035.
• The Information: 34 of 36 governors who won or led in the midterms support data center regulations.

The selloff also arrived on top of existing worries. US memory stocks fell first — Micron dropped about 7% and the Philadelphia Semiconductor Index lost 3.13% — even as the Dow rose 3.03%.

Wait — didn’t the KOSPI rise the day before?

Yes, and that context matters. On November 4, while US election returns were coming in, the KOSPI swung more than 4% intraday before closing up 0.62% at 5,683.80. Foreigners still sold about 2.5 trillion won that day, per Seoul Economic Daily.

So Thursday’s drop was the second leg: once the Democratic sweep of both chambers was clear, the market fully repriced. KED Global reports foreign investors have now been net sellers for five straight sessions.

Who was buying — and who was selling?

Source: Korea JoongAng Daily. Some outlets reported smaller dollar figures for foreign selling; we use the won figure reported from exchange data.

This is a familiar Korean pattern: foreign funds de-risk quickly on global news, and domestic retail investors — who have become a powerful force in Korean equities — buy the dip.

Not everything fell. Drugmakers rallied on hopes that Democratic health care policy will favor lower-cost alternatives such as biosimilars: Celltrion rose 7.5%, Hanmi Pharmaceutical 9.8%, and Samsung Epis Holdings 14.33%.

How bad could this get for Korean chipmakers?

Analysts are split, and the honest answer is that the market is reacting to possible policy, not announced policy.

The more relaxed view comes from Kiwoom Securities’ Han Ji-young, who told The Korea Times that projects already under way are unlikely to face major delays and that existing supply contracts should largely hold. She also argued nationwide restrictions would be hard to pass, citing presidential veto power and differing views within the Democratic Party. KB Securities’ Kwon Hee-jin made a similar point to Seoul Economic Daily: states benefit from data center tax revenue and may be reluctant to block construction outright.

The cautious view is that sentiment, not fundamentals, is in charge. Kim Dae-jun of Korea Investment & Securities told Korea JoongAng Daily he expects a turn only after the Anthropic IPO and strong Nvidia earnings and guidance.

What it means for the won and the Bank of Korea

The currency barely moved — the won weakened just 0.6 won to 1,342.1 per dollar — which suggests this was an equity-specific shock rather than a broad flight from Korea. Exporters converting record dollar earnings into won are providing a cushion, and a Citibank Korea economist still expects the won to strengthen toward 1,300 within three months, according to Seoul Economic Daily.

One more flow to watch: Samsung and SK hynix are set to pay about 44.1 trillion won in third-quarter dividends from late November through December, roughly 22.4 trillion won of it to foreign holders. Some of that money will leave Korea as year-end remittances.

For the Bank of Korea, a stock-market wobble alone is unlikely to change the picture ahead of its November 26 meeting, where a rate hike has been widely discussed on the back of strong exports and sticky inflation (see our October exports breakdown).

What to watch next

• Nvidia’s next earnings and guidance — the cleanest read on whether AI chip orders are holding up.
• Concrete legislation or state action on data centers. So far, the selloff is about expectations.
• Foreign flows: a sixth straight day of net selling would signal deeper repositioning.
• Memory contract prices, which have powered Korean chip profits this year.

The bottom line

Thursday’s 5.3% drop was a sentiment shock built on a real question: will US politics slow the AI data center build-out that has powered Korea’s chip boom? No rule has changed yet, and Korea’s export data remains extremely strong. But with two chipmakers making up about half the index, Korean stocks are now effectively a leveraged bet on US AI policy — and that cuts both ways.