The iShares MSCI South Korea ETF (EWY) tumbled in early trading after Broadcom issued AI semiconductor revenue guidance that fell short of market expectations, setting off a cascade of selling across technology-heavy Korean equities.
Broadcom said it expects roughly $16 billion in AI semiconductor sales for its third fiscal quarter of 2026, a figure that represented massive year-on-year growth but landed about 7% below the market consensus of $17.2 billion. The company also guided to $56 billion in full-year AI chip revenue, again below the $57.6 billion many investors had anticipated. Broadcom’s shares plunged more than 15% in after-hours trade, and the Philadelphia Semiconductor Index fell 5.45% on that reaction.
The selloff in U.S. chip names rippled through markets with a pronounced impact on Seoul. The KOSPI - which is heavily concentrated in semiconductor firms - became one of the earliest major indices to come under significant pressure as investors reassessed the upside embedded in chip earnings and valuations.
Two large constituents of the South Korean market bore the brunt of the move. Samsung Electronics declined 6.40%, while SK Hynix dropped 9.92%. Together these two names account for roughly 44% of EWY’s portfolio, meaning their steep losses had an outsized and immediate effect on the ETF’s net asset value. EWY itself fell about 7.7% in morning trading and hit an intraday low of $187.60, well below the prior session close of $203.97.
The KOSPI closed sharply lower, down 5.54% at 8,160.59. During the Asian trading session the benchmark sank over 6% at one point, leading to a circuit breaker after KOSPI 200 futures dropped 5% following Broadcom’s weaker-than-expected AI sales guidance. That decline in Seoul was materially steeper than the pullbacks seen in other large Asian markets - Japan’s Nikkei 225 fell 1.31% and China’s Shanghai Composite lost 0.71%.
On Wall Street the selloff was broader but more contained. The S&P 500 slipped about 0.9%, the NASDAQ declined 1.5% and the Dow Jones edged down roughly 0.3% as investors moved to de-risk positions tied to chip and technology exposure.
Foreign investors sold aggressively on the South Korean main board, offloading a net 4.3 trillion won (about $3.12 billion) on June 5 alone and recording net sales of 27 trillion won (around $19.6 billion) across the prior six trading sessions. Market participants cited a mix of profit taking and deliberate cash accumulation ahead of large initial public offerings, including a highly anticipated SpaceX IPO that has been referenced at a $2 trillion valuation, as well as potential future listings by OpenAI and Anthropic. That shift in liquidity - with global capital being readied for major IPOs - compounded selling pressure in the KOSPI.
Analysts and market commentators framed Broadcom’s results as a reminder of how fragile sentiment can be when high valuations, recent earnings upgrades and foreign inflows are all tied closely to a single narrative - in this case, AI-driven semiconductor demand. South Korea’s market structure, which already relies heavily on semiconductors for growth, has seen that dependence increase with the AI cycle, aggravating downside when investor expectations are not met.
The upshot for EWY was a rapid deterioration in value, as the ETF’s concentration in a few chip names transmitted Broadcom’s guidance miss into outsized losses in Korea. The episode underlines the sensitivity of markets with narrow sectoral leadership to negative surprises in one segment of the technology ecosystem.
What happened
- Broadcom guided to $16 billion in AI chip revenue for Q3 fiscal 2026 and $56 billion for the full year, both below consensus estimates.
- Broadcom shares plunged more than 15% in after-hours trading, initiating a broader semiconductor selloff.
- South Korea’s KOSPI and the EWY ETF were hit hard due to heavy weighting in semiconductor firms, notably Samsung Electronics and SK Hynix.
Market data cited
- EWY fell about 7.7% in morning trading and reached an intraday low of $187.60, versus a prior close of $203.97.
- Samsung Electronics declined 6.40% and SK Hynix dropped 9.92%.
- KOSPI closed down 5.54% at 8,160.59 after a session low that exceeded a 6% drop.
- Foreign investors were net sellers of 4.3 trillion won on June 5 and net sold 27 trillion won over the previous six sessions.
This episode illustrates how a single company’s guidance - when it pertains to a sector concentrated in a national market - can provoke outsized moves through correlation, index weighting and shifting global liquidity flows.