Seoul shares dip over 3% on tech sell-off amid AI concerns

South Korean shares dropped by more than 3 percent Friday, dragged down by a sell-off in semiconductor stocks amid lingering concerns over the sustainability of artificial intelligence investments. The Korean won strengthened against the US dollar.

The benchmark Korea Composite Stock Price Index lost 206.92 points, or 3.48 percent, to close at 5,730.74, after falling as low as 5,599.42.

After opening nearly 3 percent lower, the KOSPI extended its losses, prompting the Korea Exchange to activate a sell-side sidecar, shortly after 10 a.m.

A sell-side sidecar is triggered when the KOSPI 200 Futures Index falls 5 percent or more for at least one minute.

The sell-off followed overnight losses on Wall Street, where concerns over lofty AI-related valuations dampened investor sentiment.

Google parent Alphabet plunged more than 12 percent after its third-quarter revenue rose 25 percent on-year to $127.58 billion, lower than market expectations, raising concerns over returns on massive AI investments.

The tech-heavy Nasdaq Composite Index shed 1.38 percent, while the Philadelphia Semiconductor Index fell 1.4 percent, weighing on sentiment toward South Korean chipmakers.

Trade volume was light at 212.76 million shares worth 19.27 trillion won ($14.44 billion), with decliners far outnumbering advancers 655 to 232.

Foreigners sold a net 1.62 trillion won, while institutions and individuals bought a net 742.55 billion won and 620.97 billion won, respectively.

"Investors dumped shares of AI-related companies following a series of weaker-than-expected third-quarter earnings reports from major tech firms and chipmakers, while lingering concerns over the sustainability of AI-driven growth further weighed on sentiment," Kang Jin-hyuk, an analyst at Samsung Securities, said.

Most KOSPI heavyweights were in the negative territory.

Top market cap Samsung Electronics fell 3.02 percent to 225,000 won, and chip giant SK hynix sank 7.08 percent to 1.42 million won.

Leading automaker Hyundai Motor slipped 3.59 percent to 282,000 won after lowering its annual sales target and investment plans. Its sister company Kia plunged 11.73 percent to 95,600 won after reporting weaker-than-expected third-quarter operating profit.

Defense firm Hanwha Aerospace slumped 8.42 percent to 696,000 won after reporting weaker-than-expected third-quarter earnings due to delays in deliveries of K9 self-propelled howitzers to Poland.

The Korean won was trading at 1,334.3 won against the US dollar as of 3:30 p.m., up 5.2 won from the previous session's close.