South Korea's benchmark Kospi index plunged 4.9% to close at approximately 6,490 on Monday, with the Korea Exchange activating a sell-side sidecar mechanism that temporarily halted program trading after the Kospi 200 futures index fell more than 5% for at least one minute. The session underscored mounting anxiety in global markets about whether the AI-driven semiconductor rally of 2025 and early 2026 has outpaced the fundamental demand picture heading into a critical week of US technology earnings.

Samsung Electronics, South Korea's most valuable company, fell 4.4% to 245,500 won, a new low since early May, while SK Hynix — which had briefly overtaken Samsung as South Korea's most valuable listed company just four weeks ago on strength in high-bandwidth memory demand — dropped 3.3%. Combined, the two companies surrendered tens of billions in market capitalization in a single session as investors unwound crowded long positions that had accumulated on the AI infrastructure thesis.

The proximate trigger was a continuation of the global tech selloff that began Friday, when AI-related chipmaking stocks across multiple markets fell after investors reacted to TSMC's announcement of an additional $100 billion in US manufacturing investment. That commitment, while bullish for domestic semiconductor supply chain buildout over a multi-year horizon, prompted immediate concern in some quarters that the scale of capital spending across the AI ecosystem — from TSMC to the hyperscalers — is running ahead of the monetization cycle, reinforcing an "AI bubble" narrative that has surfaced repeatedly in 2026.

Taiwan's Taiex, also heavily weighted toward AI-related stocks, edged less than 0.1% lower on the day even as TSMC's local shares climbed 2%, recovering a fraction of Friday's 7.3% decline. The divergence between TSMC's partial recovery and Korea's deeper losses reflects differing investor views on the direct beneficiaries of semiconductor investment: TSMC is the capital recipient of the US buildout, while Samsung and SK Hynix face questions about how quickly their HBM memory revenue will scale relative to their current valuations.

The broader Asian session was mixed. Hong Kong's Hang Seng rose 2.1% to 25,105, the Shanghai Composite gained 1.2%, and Australia's S&P/ASX 200 edged 0.2% higher. Japan's market was closed for the Marine Day holiday. India's Sensex slipped 0.9%.

In the United States, Nasdaq-100 futures pointed roughly 0.7% to 1.0% higher heading into the open, suggesting that US investors were not directly importing Korea's panic selling at the open, with much of the anticipated macro negativity from re-escalating US-Iran conflict and AI valuation debate treated as already partially priced in from last week's losses. The VanEck Semiconductor ETF had dropped nearly 9% in the week ending July 17, its third weekly decline in four weeks, leaving the sector in a technically challenged posture entering Wednesday's megacap earnings. Cathie Wood's ARK Invest used Friday's semiconductor weakness to add to its SpaceX and CoreWeave positions, a signal that some institutional investors are treating the pullback as a buying opportunity in next-generation AI infrastructure rather than a structural turning point.