Asia's chip super week: the AI trade on trial

<p><em>Special Reporting from LSN News, adapted from today's Asia Money Map episode. <a href="https://youtu.be/SHtrt6NTHxg" target="_blank" rel="noopener">Watch the video on YouTube.</a></em></p>

<p>South Korea's KOSPI closed at 5,469.47 on Monday, 26 October, its lowest finish since early April, according to Yonhap and the Korea Exchange. One of the markets that rode the artificial intelligence boom hardest in Asia is now on trial, in a week that will test whether the AI trade still has the spending behind it.</p>

<h2>Seoul and Tokyo sell chips</h2>

<p>The KOSPI fell 1.46% on Monday. Foreign investors sold a net 695.5 billion won of Korean shares, about $526 million, Yonhap reports. The tech-heavy KOSDAQ dropped 3.26% to its lowest close since the end of July, the Seoul Economic Daily reports, and Samsung Electronics lost 1.16%. In Tokyo, the Nikkei fell for a third straight session, down 0.8% to its lowest close since 30 July, Reuters reports, with chip equipment makers Screen Holdings and Kokusai Electric among the biggest losers.</p>

<p>Reuters reports the AI trade has come under pressure this month amid concerns that debt-funded spending may become harder to justify as borrowing costs climb. The Philadelphia semiconductor index is still down 12.2% on the month, even after a 2.8% jump on Monday. The Seoul Economic Daily says a surge in oil prices also helped drag Korean shares lower. "The key is big tech earnings," said Lee Kyoung-min of Daishin Securities.</p>

<h2>Korea's concentrated bet</h2>

<p>South Korea's exports rose 84% from a year earlier in September to a record $120.9 billion, led by a 262.8% surge in chip exports to $60.3 billion, Reuters reports. Semiconductors accounted for nearly half of all shipments. The Bank of Korea held its key rate at 3% last Thursday and raised its growth forecast for this year to 3.3%. Its advance estimate, published on Tuesday after this episode was recorded, showed the economy grew 1.0% in the third quarter from the previous three months, ahead of the 0.7% tipped in a Reuters poll, and 3.4% from a year earlier. The Bank of Korea's Lee Dong-won said semiconductors accounted for about half of the quarter's growth, while private consumption fell 0.2%, Channel NewsAsia and Business Korea report.</p>

<p>But the boom is narrow. "The Korean economy is very vulnerable to this as everything now is driven mainly by the semiconductor industry," Kelvin Lam of Pantheon Macroeconomics told Reuters. Jeong Woo Park of Nomura said the labour market is structurally in downturn, and that "for the younger generation it is very hard to find jobs."</p>

<p>It is not only Korea. Japan's chip toolmakers are in the same trade. In China, official data published last month showed profits in electronics manufacturing jumped 110% in the first eight months of the year, even as overall industrial profit growth slowed to 4.2% in August.</p>

<h2>The week that decides it</h2>

<p>Overnight, Wall Street rallied: Reuters reports the Nasdaq gained 0.83% after Anthropic's filing for an initial public offering lifted AI-related stocks. Meta, however, fell 1.9% after saying it plans to raise up to $95 billion in equity to fund its AI build-out.</p>

<p>SK hynix reports on Wednesday and Samsung Electronics on Thursday, Yonhap reports. Alphabet, Microsoft and Amazon also report this week, and Reuters says their results will be parsed for signs that heavy AI investment is turning into growth. The Federal Reserve decides on Wednesday, with markets pricing only a 12.7% chance of a hike, according to CME FedWatch, and the Bank of Japan meets at the end of the week.</p>

<p>Our verdict: Asia's chip economies are not in a bust. Exports are at records, and Korea's central bank is still upgrading its forecasts. But the AI trade is now priced on spending plans in California, not on shipments from Korea. If the hyperscalers keep writing the cheques, Monday was a dip. If they blink, Asia's most concentrated growth story becomes its biggest single risk.</p>

<h2>Sources</h2>

<ul>

<li><a href="https://en.sedaily.com/news/2026/10/26/kospi-slides-below-5500-to-seven-month-low-as-foreigners" target="_blank" rel="noopener">Seoul Economic Daily (en.sedaily.com)</a></li>

<li><a href="https://en.yna.co.kr/view/AEN20261026006400320" target="_blank" rel="noopener">Yonhap</a></li>

<li><a href="https://www.channelnewsasia.com/business/japans-nikkei-falls-3rd-day-tech-sector-weighs-energy-shares-rise-6491866" target="_blank" rel="noopener">Reuters via CNA</a></li>

<li><a href="https://finance.yahoo.com/markets/stocks/articles/us-stock-futures-edge-oil-100215774.html" target="_blank" rel="noopener">Reuters via Yahoo Finance</a></li>

<li><a href="https://www.investing.com/news/economy-news/south-korean-economys-growth-likely-picked-up-in-q3-on-chip-exports-reuters-poll-4968041" target="_blank" rel="noopener">Reuters via Investing.com</a></li>

<li><a href="https://www.bok.or.kr/eng/stats/statsPublictSchdul/listCldr.do?date=2026-10&amp;menuNo=400359" target="_blank" rel="noopener">Bank of Korea statistical calendar</a></li>

<li><a href="https://en.sedaily.com/finance/2026/10/25/koreas-q3-growth-data-arrives-amid-global-rate-super-week" target="_blank" rel="noopener">Seoul Economic Daily (en.sedaily.com)</a></li>

<li><a href="https://english.www.gov.cn/archive/statistics/202609/28/content_WS6ab9d6f1c6d00ca5f9a0d7e5.html" target="_blank" rel="noopener">Xinhua via english.gov.cn (NBS data)</a></li>

<li><a href="https://www.reuters.com/world/asia-pacific/china-industrial-profits-rise-157-january-august-2026-09-28/" target="_blank" rel="noopener">Reuters</a></li>

<li><a href="https://economictimes.indiatimes.com/markets/us-stocks/wall-street-guide/5-world-market-themes-for-the-week-ahead/articleshow/135161184.cms" target="_blank" rel="noopener">Reuters week-ahead via Economic Times</a></li>

<li><a href="https://www.bok.or.kr/portal/bbs/B0000501/view.do?nttId=11065944&amp;menuNo=201264" target="_blank" rel="noopener">Bank of Korea press release</a></li>

<li><a href="https://www.channelnewsasia.com/east-asia/south-korea-economic-growth-third-quarter-2026-estimates-6494601" target="_blank" rel="noopener">Channel NewsAsia (Reuters)</a></li>

<li><a href="https://www.businesskorea.co.kr/news/articleView.html?idxno=279717" target="_blank" rel="noopener">Business Korea</a></li>

</ul>