Introduction
South Korea’s Kospi index closed 10.84% lower at 6,023.66 on Tuesday 28 July 2026, its steepest single-day fall since early March. The drop was severe enough that the Korea Exchange triggered a market-wide circuit breaker and suspended trading for 20 minutes. Samsung Electronics and SK Hynix, which between them dominate the index, both fell by more than 12%.
The selling was not really about Korea. It was about semiconductors, and about whether the enormous sums being spent on artificial intelligence infrastructure will earn a return. That question reaches into a lot of UK portfolios, because the average global index fund holds far more technology than most people who own one realise.
Here is what happened, why chip shares are at the centre of it, and how much of it a typical UK investor is actually exposed to.
The information provided on this page and throughout the website is for general information purposes only and does not constitute financial advice. Investments can fall as well as rise in value and you may get back less than you put in. Past performance is not a guide to future returns. It is important that you conduct your own research and consider your own personal circumstances before making any investment decisions.
What Happened in Seoul
The Kospi closed at 6,023.66 on 28 July, down 10.84% on the day. That is the index’s worst session since 4 March, when it fell 12.06%. Trading was halted for 20 minutes when the fall breached the exchange’s first circuit breaker threshold, a mechanism designed to give traders time to pause rather than to stop prices falling.
This was not a one-day event. The Kospi set a record close of 9,114.55 on 22 June, then dropped into bear market territory on 8 July at 7,246.79, a fall of more than 20% in under three weeks. From that June peak to Tuesday’s close, the index is down roughly 34%, as the chart below shows.
The concentration is the point. Samsung Electronics and SK Hynix are memory chipmakers, and together they account for close to half the Kospi’s value. When the market reprices memory chips, it reprices the whole Korean index.
Why Chip Shares Fell So Hard
Three separate developments landed inside the same 48 hours, and each one chipped away at the same assumption.
1. China moved up the lithography ladder. On 27 July, technology publication The Information reported that a Chinese state-backed group had begun mass production of domestically developed immersion deep ultraviolet lithography machines. Lithography is the stage of chipmaking where circuit patterns are printed onto silicon wafers, and it has long been the industry’s tightest bottleneck. ASML, the Dutch company that has effectively monopolised the most advanced lithography tools, closed around 6% lower on the news, having been down as much as 8.2% during the session.
2. A new Chinese memory giant listed. ChangXin Memory Technologies, known as CXMT, debuted on the Shanghai Stock Exchange’s STAR Market. Priced at 8.66 yuan a share, it closed its first day at 49 yuan, a gain of 465.82%, in Asia’s largest initial public offering of the year. CXMT makes DRAM, the same category of memory chip that Samsung and SK Hynix sell.
3. Doubts about AI spending resurfaced. A recurring worry through 2026 is that some AI chip demand is circular: chipmakers invest in AI companies, which then spend that money buying chips. Any hint that demand is partly self-financed rather than driven by end customers weakens the case for current chip valuations.
DUV and EUV: What Was Actually Reported
It is worth being precise about what was actually reported, because the distinction got lost in Monday’s trading.
Deep ultraviolet, or DUV, is the previous generation of lithography technology. Extreme ultraviolet, or EUV, is the newer and far more difficult step that ASML alone supplies, and which is required for the most advanced chips. The systems reported in China are DUV, not EUV, and the group behind them is said to be planning five machines in 2026 and 20 in 2027.
That is a meaningful narrowing of a competitive gap rather than the end of ASML’s advantage. Markets moved as though it were the latter, which is a fairly normal reaction to a genuinely new piece of information arriving in a highly valued sector.
How Much of This Do UK Investors Already Own?
Most UK investors do not hold Samsung or SK Hynix on purpose. A good number hold them anyway, without ever having chosen to.
A global tracker fund sounds like the definition of diversified. Look at what sits inside one and it is less balanced than the name suggests. As at 30 June 2026, information technology made up 30.27% of the MSCI World index, its largest sector by a wide margin. The United States accounted for 72.45% of the index, with Japan at 5.69% and the United Kingdom at 3.45%.
So a UK investor holding a global tracker in an ISA has roughly three pounds in every ten sitting in technology, and around seven in every ten in a single country. That is not an argument against index funds. It is what the index looks like in 2026, and it is worth knowing before a week like this one rather than during it.
Where Korean chipmakers sit in common tracker funds
| Fund type | Holds Samsung and SK Hynix? | Why |
|---|---|---|
| MSCI World tracker | No | MSCI classifies South Korea as an emerging market, so Korean shares sit outside the developed world index. |
| FTSE Developed or FTSE All-World tracker | Yes | FTSE Russell has classified South Korea as a developed market since 2009. |
| MSCI Emerging Markets tracker | Yes | South Korea is roughly 21% of the MSCI emerging markets benchmark. |
| FTSE 100 tracker | No | The UK large-cap index contains no semiconductor manufacturers. |
Source: MSCI and FTSE Russell market classification, July 2026.
The reason for the split is that MSCI and FTSE Russell disagree about South Korea. MSCI still treats it as an emerging market, citing restrictions on trading the won and on foreign investor access. FTSE Russell reclassified it as developed back in 2009. Same country, same companies, two different answers, and your fund follows one of them.
The FTSE 100, by contrast, contains no semiconductor manufacturers at all. It leans towards banks, energy, pharmaceuticals, mining and consumer goods. On Monday 27 July, while chip shares were being marked down, the FTSE 100 closed at 10,781.75, up 0.42% on the day, helped along by falling oil prices.
That is diversification doing its job in one direction. It cuts the other way too: the same absence of technology exposure is why the UK index lagged so badly through the AI rally. Holding both is the usual answer, not picking a side. If you are comparing platforms for a low-cost tracker portfolio, our InvestEngine review and Vanguard UK investing review set out how the fees and fund ranges differ.
What This Does and Does Not Tell You
A 10% fall in a foreign index makes a striking headline. Whether it matters to you depends almost entirely on how much of it you own and how long you intend to hold it.
For someone paying monthly into a global tracker over a working life, a repricing in semiconductors mostly changes the price at which the next few contributions buy shares. It is uncomfortable to watch. It is not, on its own, a reason to do anything.
Where a week like this does justify a look is concentration. If your ISA holds a global tracker, a US tracker and a technology fund, you may own the same handful of companies three times over without having meant to. That is worth checking, and it is a far more useful exercise than reacting to a single session. Our compound interest calculator shows how heavily long-run outcomes lean on contributions and time rather than on any one quarter.
What to Watch Next
Closer to home, the Bank of England announces its next Bank Rate decision on Thursday 30 July 2026. Bank Rate currently stands at 3.75%, held there by a 7 to 2 vote at the June meeting. For most UK savers, that decision will do more to their cash and bond holdings than anything happening in Seoul.
On the chip story itself, the questions worth following are whether Chinese DUV production actually scales at the rate reported, whether memory chip prices hold up as CXMT expands, and whether AI capital spending turns out to be funded by genuine end demand. None of those will be settled quickly.
If this has prompted you to look at what you actually hold and what you are paying for it, our find your broker tool is a reasonable place to start.
Key Takeaways
The Kospi fell 10.84% and is down about 34% from its June record
Two memory chipmakers, Samsung Electronics and SK Hynix, drove most of the move.
The trigger was competitive, not economic
Chinese progress in lithography tools and memory manufacturing, plus fresh doubts about AI spending.
A global tracker is more concentrated than it sounds
Information technology was 30.27% of the MSCI World index and the United States 72.45%, as at 30 June 2026.
Whether you own Korean chipmakers depends on your index
MSCI World excludes South Korea. FTSE All-World and FTSE Developed trackers include it.
Check for overlap before you check the headlines
A global tracker, a US tracker and a technology fund can leave you owning the same companies three times over.
Figures in this article were checked against Korea Exchange closing data as reported by the Korea JoongAng Daily, Bloomberg on ASML and Chinese DUV tool production, CNBC on the CXMT listing, the MSCI World index factsheet for sector and country weights, and the Bank of England for Bank Rate.
The information provided on this page and throughout the website is for general information purposes only and does not constitute financial advice. Investments can fall as well as rise in value and you may get back less than you put in. Past performance is not a guide to future returns. It is important that you conduct your own research and consider your own personal circumstances before making any investment decisions.
