South Korea's benchmark Kospi index plunged more than 10 percent on Tuesday, leading regional losses and reaching its lowest level in three months. The market suffered a series of trading suspensions, including a 20-minute halt after the index slid by 8 percent. The index fell as much as 8.2 percent, taking its two-day decline to more than 18 percent.
The sell-off was driven by heavy losses in the semiconductor sector, with memory chipmaking powerhouses Samsung and SK Hynix falling by more than 10 percent. Japanese stocks also slid as investor sentiment worsened. The downturn was further exacerbated by disappointment over SK Hynix earnings and retail investors cutting their holdings.
Investors are questioning lofty valuations and whether the artificial intelligence boom can be sustained. Concerns have risen regarding the massive amount of borrowing among AI companies to fund datacenter expansion and infrastructure financing. Additionally, sentiment was weighed down by intensifying competition from Chinese chipmakers and concerns over Nvidia Corp.'s blockbuster AI supply deal.