Chip Rout Goes Global as Kospi Triggers a Trading Halt, and the PRISM Semiconductors Index Takes a Broad Hit

The sell-off in AI-linked stocks reached chipmakers worldwide on Thursday. South Korea’s Kospi dropped as much as 8% and set off a 20-minute trading halt, and Japan’s Nikkei fell almost 5%. In the US, memory and storage stocks fell again in premarket trading. Small-cap chip stocks had already felt it: on Wednesday, all 14 members of the PRISM Semiconductors Index fell, by an average of about 7.4%. Investors are now asking whether the companies paying for the AI build-out can keep spending if interest rates rise again.

Key Points

• The Kospi fell about 7.7% and triggered its first trading halt in 78 days. SK Hynix dropped 11.4% and Samsung Electronics 9.5%.
• The Philadelphia Semiconductor Index fell 4.3% on Wednesday and is down nearly 12% over nine sessions.
• All 14 PRISM Semiconductors Index stocks closed lower on Wednesday. inTEST, indie Semiconductor, Everspin, Alpha and Omega Semiconductor and Amtech each fell 9% or more.
• TSMC reported record third-quarter net income, up 68.7%, and guided fourth-quarter revenue to $52.3 billion to $54.3 billion. Its US shares still slipped in premarket trading.
• In US premarket trading, Micron fell about 4% and SK Hynix’s US shares fell nearly 7%. Western Digital and Seagate each lost more than 4%.

From a Hot CPI Print to an AI Funding Scare

The sell-off started with Wednesday’s hotter-than-expected inflation report, which revived bets on a Fed rate hike. The bigger worry, however, is about who pays for AI data centers. CoreWeave fell nearly 16% on Wednesday as the yield on one of its bonds climbed toward 15%, a sign that lenders see more risk in debt-funded AI expansion. Oracle also dropped about 9%.

That worry quickly reached the chip supply chain. Korean memory makers depend heavily on spending by data centers and the big cloud companies, so they took the hardest hit. Kiwoom Securities analyst Han Ji-young said investors are shifting their focus from how much companies spend to whether they can turn that spending into profit and cash.

Small Caps Feel It Most

High-beta small-cap chip stocks fell sharply. Within the PRISM Semiconductors Index, Wednesday’s biggest decliners were:

• inTEST (INTT): down about 9.5%
• indie Semiconductor (INDI): down about 9.5%
• Everspin Technologies (MRAM): down about 9.4%
• Alpha and Omega Semiconductor (AOSL): down about 9.2%
• Amtech Systems (ASYS): down about 9.1%
• QuickLogic (QUIK): down about 8.6%

Fundamentals don’t explain these moves. Earlier this month, PRISM MarketView reported that inTEST expects record third-quarter orders as demand builds for back-end chip testing. Even so, inTEST fell about as much as anyone in the index. In other words, investors sold the whole group regardless of each company’s results.

The Demand Data Still Look Strong

The industry’s biggest companies are telling a different story than their stock prices. TSMC posted its sixth straight record quarter, with net income up 68.7%. It also expects about 44% revenue growth for 2026. Meanwhile, chip-equipment maker ASML said demand for its machines will likely exceed supply through 2028, and some customers are already discussing capacity for 2029 and 2030. For now, though, worries about interest rates and AI financing are outweighing that demand.

What Investors Should Watch

Rate expectations will shape the next few weeks. Futures traders now see a meaningful chance the Fed raises rates at its October 27–28 meeting. Investors will also watch AI credit markets, especially bond yields for heavily indebted data center operators, and upcoming earnings from chip and equipment makers. For the PRISM Semiconductors Index, a recovery likely depends on whether AI spending holds up, as TSMC and ASML expect, or whether higher borrowing costs force companies to cut back.