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Kospi circuit breaker, Nasdaq -5.5%: AI chip stocks fall on data center fears

Chip and AI shares tumbled on 5-6 November after US midterm results raised fears of slower data center build-outs; analysts call the reaction overdone.

audiotale.net team

· 7 min read

Written by AI from the sources linked below. How we use AI

On this page
  1. Key points
  2. What happened
  3. Seoul in detail
  4. Background
  5. The numbers
  6. What it means
  7. What we don't know yet
  8. What to watch next
  9. Sources

Chip and AI stocks fell sharply on Wall Street on Thursday 5 November 2026 and the selling spread across Asia on Friday 6 November, after investors worried that Democratic gains in the US midterm elections could slow the construction of AI data centers. The Nasdaq fell 5.52%, the Philadelphia Semiconductor Index fell about 12.2%, and South Korea's Kospi closed down 6.02% after a circuit breaker halted trading. For developers and AI teams the question is whether the build-out of compute capacity is really at risk, and the evidence so far says the fear is running ahead of any actual policy.

Key points

  • The Nasdaq Composite fell 5.52% and the S&P 500 fell 4.36% on Thursday 5 November, according to Korean media citing US closing data; the Philadelphia Semiconductor Index fell about 12.2%.
  • Reuters, via Business Standard, says about $3 trillion was wiped off S&P 500 companies and the Nasdaq is down 12% from its record close a month earlier.
  • On Friday the Kospi opened 2.24% lower, fell 8.52% to 4,924.61 at 9:03 a.m. Seoul time, triggering its 11th first-level circuit breaker of 2026, and closed at 5,059.69, down 6.02%.
  • Samsung Electronics closed down 6.35% and SK hynix down 10.44% in Seoul, according to the Korea Herald; Reuters reported TSMC down 8.5% and Kioxia down 14% during Asian trading.
  • Analysts quoted by the Korea Herald call the regulation fears overblown; we found no report of an actual data center construction ban.

What happened

The sell-off started in New York. According to SBS News in Seoul, the Nasdaq recorded its largest one-day drop on record on Thursday, falling 5.52% while the S&P 500 fell 4.36% (the S&P figure is from Korea JoongAng Daily). The Philadelphia Semiconductor Index fell 12.2% by SBS's count. Reuters, in a report carried by Business Standard, described it as the steepest decline in US stocks since the tariff-driven "Liberation Day" rout of April 2025, with Wall Street's volatility gauge surging.

The stated trigger was the US midterm elections. Democrats won both the Senate and the House, according to SBS, and investors worried they would "apply the brakes to the AI boom", in Reuters' words. SBS adds a detail that explains why the move was so broad: right after the election, shares of hyperscalers such as Microsoft, Amazon and Alphabet rose while infrastructure names such as semiconductors fell, but on Thursday "all sectors appeared to take a hit". Reuters notes the Nasdaq first swung higher after the midterms and then reversed.

Asia took the hit on Friday. By Reuters' midday count South Korea's Kospi triggered a circuit breaker, Japan's Nikkei slumped about 6% and Taiwan was down more than 8%. Nikkei Asia's headline says Taiwan's stocks had their steepest ever fall, but we could not confirm the Taiex's closing figures and so do not state them.

Seoul in detail

The Kospi opened down 120.54 points, or 2.24%, at 5,263.26, according to Korea JoongAng Daily. At 9:03 a.m. it was down 459.19 points, or 8.52%, at 4,924.61. A first-level circuit breaker triggers when the index falls at least 8% from the prior close and stays there for a minute; trading then halts for 20 minutes, followed by a 10-minute single-price auction. It was the 11th such trigger this year. The Korea Herald gives a slightly lower intraday low of 4,911.28 (down 8.78%); the difference is a matter of when each outlet sampled the index.

The index recovered part of the loss. The Korea Herald reports a close of 5,059.69, down 6.02%, and the first intraday dip under 5,000 since 6 February. The tech-heavy Kosdaq fell 5.03% to 644.27. Foreign investors were net sellers of 2.77 trillion won, while retail investors bought 601 billion won and institutions 1.70 trillion won. The won weakened 14.5 to 1,356.6 per dollar, its sharpest daily fall since 12 May.

Background

The fall is large partly because 2026 had been a huge year for Korean chip stocks. The Kospi ended 2025 at 4,214.17 and peaked at 9,114.55 on 22 June, the Korea Herald reports, so Friday's close was about 55% of that high (our calculation). Samsung Electronics has lost roughly half its value from its 2026 peak of 374,500 won, closing Friday at 188,700 won. SK hynix's intraday low of 1.089 million won compares with a 2026 peak of 2.987 million won.

Doubts about AI spending were already present. Reuters says the political jitters hit "an AI trade already on shaky footing" because of worries about the return on the huge sums being invested. The Kospi had also fallen 5.28% on Thursday, the Korea Herald notes, so part of the data center worry was already in prices before Friday.

The data center angle has its own backdrop. Bloomberg, in a headline we could only see through Techmeme's summary, reports Cleanview data that about 40% of planned US data center capacity sits in states where newly elected governors have pledged to pause or halt construction. We could not open the article, so we cannot give the underlying figures. Local opposition to data centers, over power, water and cost, is a theme in several reports we read, including Reuters' remark that markets have "yet to fully consider the cost such building has imposed on communities".

The numbers

Falls in share prices, 5-6 November 2026 (selected, as reported)% drop
Falls in share prices, 5-6 November 2026 (selected, as reported) (% drop)
% drop
Kioxia (Asia trading, Nov 6)14
Philadelphia Semiconductor Index (Nov 5)12.2
SK hynix (Kospi close, Nov 6)10.44
TSMC (Asia trading, Nov 6)8.5
Samsung Electronics (Kospi close, Nov 6)6.35
Kospi (close, Nov 6)6.02
Nasdaq Composite (Nov 5)5.52
S&P 500 (Nov 5)4.36

Source: Korea Herald, SBS News, Reuters via Business Standard

Note the mix: some figures are closing moves and some are intraday moves reported mid-session, as labelled. Reuters also reported SoftBank down 11% and CoreWeave down 10%, with CoreWeave's five-year credit default swap spreads at a record, which is a sign that the stress reached the borrowing side of the AI build-out, not only share prices.

What it means

For developers and teams that use AI services, nothing changes in an API today. The risk is indirect. Cloud and model providers plan GPU capacity years ahead on the assumption that data centers get built and powered. If power-hungry projects face pauses, permitting delays or higher costs, the likely result would be slower capacity growth and higher prices for compute, not an outage. The Korea Herald quotes Daishin Securities analyst Lee Kyung-min estimating a 15 to 30 percent probability of new project suspensions in Texas, Georgia and Ohio, with real risk centred on "rising costs and construction delays". That is one analyst's estimate, not a measured figure.

The winners and losers are uneven. Memory makers such as Samsung, SK hynix and Kioxia took the heaviest hits because their earnings have leaned on AI demand. Highly leveraged AI infrastructure companies were hit on credit as well as on equity. Hyperscalers initially rose after the vote, which suggests investors saw regulation as a bigger problem for chip suppliers than for the companies that rent compute out.

Several analysts urged caution. Reuters quotes Saxo's Charu Chanana saying there is "an element of panic in the selling", with positioning making the adjustment violent. Eugene Investment and Securities' Lee Jun-young, quoted by the Korea Herald, called fears of a sharp AI investment drop and a severe US slowdown "excessive at this point".

What we don't know yet

  • Whether any Democratic proposal on data centers will become law or regulation. We found no report of a specific measure; the sources describe fears, not decisions.
  • How much of the fall comes from politics and how much from earlier doubts about AI returns. Reuters and the Korea Herald both point to existing worries.
  • Taiwan's and Japan's closing figures. Reuters gave midday moves only, and we did not confirm closes.
  • Whether the move continues or reverses. This is a one-day picture.

What to watch next

  • US trading on Friday and the following week, and whether the Philadelphia Semiconductor Index stabilises.
  • Any announced state or federal data center measures, and the Cleanview figures Bloomberg cites.
  • Capacity and capital-spending guidance from the big cloud and chip companies, and credit conditions for AI infrastructure firms such as CoreWeave.
  • Samsung and SK hynix commentary on AI memory demand.

For background on the hardware side, see our recent look at Nvidia's Vera Rubin NVL72 spec page and Meta's equity plan and Nvidia and AMD investments. This article reports market moves and is not investment advice.

Sources

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audiotale.net team

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