Japan, South Korea Chip Stocks Slide: SoftBank Falls Despite Earnings Beat

Japan South Korea chip stocks reversed their August rally on Thursday and Friday, with the KOSPI and Nikkei 225 sliding as AI spending concerns resurfaced across global markets. SoftBank Group, Japan's biggest tech investor, fell more than 5% in Tokyo on August 7 even after reporting quarterly net income of 347.3 billion yen, above analyst estimates, while memory makers SK Hynix and Kioxia dropped sharply. The pullback came just two days after the KOSPI had surged more than 4% and SoftBank had jumped 14%, underscoring how volatile the AI trade has become since the June selloff that crashed the KOSPI by 10% knocked Asia's tech-heavy indexes into bear-market territory.

What Happened

On August 6, South Korea's KOSPI fell about 2% and Japan's Nikkei 225 dropped more than 1%, erasing the previous session's gains. SK Hynix tumbled 9.71% and Kioxia declined 8.84%, while SoftBank Group slipped 4.36%, according to CNBC. The selling continued into August 7: Japanese stocks fell more than 1% as chip shares tumbled, and the KOSPI reversed early gains with SoftBank sliding more than 5%.

The immediate trigger was SoftBank's quarterly results. The company reported net income of 347.3 billion yen for the June quarter, down 18% from 421.8 billion yen a year earlier but comfortably above the 147-166 billion yen analysts had expected, with sales rising nearly 11% to 2 trillion yen, about $12.7 billion. Instead of rewarding the beat, investors sold the stock, extending a pattern in which SoftBank has beaten estimates for four straight quarters yet seen its shares decline each time, according to Investing.com.

Why It Matters

Samsung Electronics and SK Hynix together account for roughly half of the KOSPI's market value, so every swing in AI memory-chip sentiment moves South Korea's entire $4 trillion equity market, and increasingly global risk appetite. The KOSPI remains about 26% below its June 22 record close after entering a bear market in July, when South Korea lost roughly $2.18 trillion in market value during July's AI-led selloff.

The latest drop shows that doubts over AI capital spending are unresolved. Those fears have already hit the United States, where Oracle shares plunged 10% on its $180 billion capex plan. The risk-off mood has also reached digital assets, with this week's Coldcard hardware wallet hack draining more than $130 million in bitcoin. Japan's Nikkei, meanwhile, increasingly tracks the KOSPI rather than domestic fundamentals, traders told the Seoul Economic Daily.

What's Next

Strategists are split on whether this is a temporary unwind or a deeper correction. Goldman Sachs still forecasts fresh highs for the Korean market, citing consensus 2026 earnings growth of 23% and aligning with its expectation of two Fed rate cuts in 2026, while other analysts describe the selloff as an AI-valuation reset rather than a broken thesis.

Investors are watching three signals: Nvidia's next earnings and financing plans, competition from Chinese chipmakers, and whether SoftBank can monetise its OpenAI stake and ARM holdings. The AI landscape itself is shifting, as models increasingly train on their own synthetic data and the EU tightens AI watermark rules. Volatility itself is now the trade, with semiconductor ETFs, which tripled their share of Korea's ETF market this year, amplifying every move in both directions.