Kioxia Drops 16% as Korean Crash Hammers Asian Chips
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- South Korean retail traders — 1.2 million faced margin calls (over 3% of the adult population), with 350,000 accounts liquidated this week per Goldman Sachs trader Ioannis Blekos
- Kioxia Holdings led Japan's losses with a 16% drop, followed by Sumco (-15.17%), Ibiden (-9.88%), and Tokyo Electron (-8.17%) as the Kospi selloff washed across Asian shores
- TSMC fell 7% despite announcing a beat-and-raise Q2 earnings report on Thursday, illustrating Stephen Innes's point that when "good news cannot lift a stock, the market is no longer trading the news"
- The Philadelphia Semiconductor Index dropped 4% Thursday, pushing its 2026 peak-to-trough decline to 19% — within one percentage point of a technical bear market
- YTD 2026 returns before the selloff had been extraordinary: Kioxia +359%, SK Hynix +172%, Samsung +112%, TSMC +44%, even as earnings forecasts continued rising and valuations became more compelling
- Citi's David Chew reported $6.4B in inflows to Korean ETFs and $2.8B to Taiwan ETFs this week, plus a $500M international inflow into Korea — a reversal of months of heavy outflows
- South Korea's Financial Services Commission announced it will triple the minimum deposit required to open a brokerage account and prohibit new leveraged products on benchmark heavyweights to impose order on the domestic market
Why it matters: The semiconductor selloff is a positioning unwind, not a fundamentals story — ASML and Micron both recently posted robust earnings, and chip makers report supply cannot meet demand. The 1.2 million Korean margin calls illustrate leverage risk during corrections, while $9.2B in ETF inflows plus the FSC's crackdown on leveraged products suggest the market and regulators are both trying to prevent the correction from becoming mechanical.
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