Democrat sweep sends Korea’s AI chip stocks on a silicon slip 🧊

SK Hynix shares fell 7.74% to 1.288 million won on Thursday, while Samsung Electronics dropped 5.50% to 206,000 won by 10:01 a.m., as US Democrats’ control of Congress revived fears of tighter artificial intelligence (AI) rules. The Korea Composite Stock Price Index (KOSPI) fell 1.98% to 5,570.99 by 9:15 a.m., with SK Hynix opening nearly 8% down.

The Korean chip selloff came despite a 3% rise in the Dow on Wednesday and a 1,500-point jump, as markets priced in a divided government. The Philadelphia Semiconductor Index fell 3.1% to a six-month low. Democrats take control when lawmakers are sworn in on Jan. 3, WBUR reported, and Barclays said the result likely brings legislative gridlock, LBC reported. Yonhap cited no specific bill behind the chip selloff.

Concerns centered on potential restrictions affecting AI data centers, which drive demand for the high-bandwidth memory (HBM) chips supplied by SK Hynix and Samsung. A USC Annenberg survey of 2,980 adults found 78% say government does too little on data centers, including 69% of Republicans.

TradingView data showed SK Hynix down 29.86% over one month and Samsung down 26.39%, although SK Hynix remained up 97.70% year to date. The company closed at 1.487 million won on Oct. 28 after reporting record quarterly sales of 104.6 trillion won, leaving its shares about 13% below that close. On Oct. 25, Goldman Sachs cut its KOSPI target to 9,000 from 12,000, estimating that chip valuations implied a 65% drop in 2027 sector earnings and calling that pricing excessively pessimistic.