SEOUL — South Korea’s benchmark KOSPI plunged 10.84% on Tuesday, July 28, in a broad market rout led by the country’s semiconductor giants, forcing the exchange to halt trading and exposing the fragility surrounding artificial-intelligence investments. The index lost 732.09 points to close at 6,023.66 after falling as low as 5,830.39 during the session. It was the KOSPI’s lowest close since April 14 and its worst daily performance in nearly five months.

The selling began immediately. The index opened 5.26% lower and continued to slide through the morning. At 10:14 a.m. local time, Korea Exchange activated a marketwide circuit breaker after the decline exceeded 8% and persisted long enough to meet the exchange’s threshold. Trading in KOSPI-listed shares stopped for 20 minutes, giving investors a mandatory pause before transactions resumed. The interruption slowed trading but did not reverse the decline.

Losses reached far beyond a handful of speculative companies. Samsung Electronics fell 13.39% to 220,000 won, while SK hynix dropped 14.65% to 1.55 million won. Their size and combined weight in the index turned the semiconductor selloff into a national market event. SK Square sank 15.6%, Hanmi Semiconductor lost 12.22%, Hyundai Motor fell 9.68%, Kia declined 6.6% and internet company Naver slid 6.67%.

Market breadth showed how severe the session became. Declining stocks outnumbered gainers by 875 to 36. About 324.2 million shares changed hands, worth 33.69 trillion won, or roughly $23 billion. Foreign investors sold a net 4.97 trillion won of local shares. South Korean individuals bought a net 4.33 trillion won, while institutions purchased about 630.1 billion won, absorbing some of the foreign selling without preventing the collapse.

No single confirmed trigger emerged. Reporting connected the mood to an overnight decline in American semiconductor shares, intensifying questions about whether enormous AI infrastructure budgets will generate adequate returns, and concern about China’s progress in chip manufacturing. Those are market interpretations, not a proven chain of causation. A Mirae Asset Securities analyst said the fall did not reflect one newly disclosed negative development, but familiar concerns colliding with weakened sentiment before major technology companies reported earnings.

That distinction matters. Markets often move before the underlying argument has been settled, especially when a small number of highly valued companies dominate an index. The July 28 decline demonstrated how South Korea’s exposure to memory chips can amplify a change in global technology sentiment. When Samsung and SK hynix fall together by double digits, the KOSPI cannot behave like a diversified collection of unrelated businesses, even when many listed companies have little direct connection to AI data centres.

The deeper question is not simply whether AI is valuable. It is who will capture that value, how quickly revenue will arrive and whether today’s infrastructure spending can earn acceptable returns. Semiconductor suppliers benefit when customers race to build computing capacity, but they also face cyclical demand, enormous capital requirements and competitive pressure. Reports about Chinese advances add another concern, yet the scale, timing and commercial effect of that competition remain uncertain. Tuesday’s prices reflected fear about those possibilities; they did not prove every fear correct.

The circuit breaker also deserves perspective. Korea Exchange’s rule is designed to interrupt panic and give investors time to reconsider orders after an exceptional decline. It is a safeguard for orderly trading, not a promise that prices will recover. The continued losses after trading resumed showed the limit of mechanical protections when investors collectively decide to reduce risk. Regulators can create a pause, but they cannot manufacture agreement about what a company or an industry is worth.

Other markets offered a more nuanced signal than the headline crash. The won strengthened by six won to 1,462.5 against the U.S. dollar, while government bond prices rose and yields fell. That divergence suggests the shock was concentrated heavily in equities rather than becoming an indiscriminate flight from every South Korean asset. Even so, one day cannot establish whether the selloff was a temporary repricing or the beginning of a deeper retreat. Earnings, foreign investment flows and evidence of returns from AI spending will decide that. The confirmed fact from July 28 is narrower but still consequential: confidence broke violently, and South Korea’s chip-heavy market had nowhere to hide.