Korea’s ‘Black Tuesday’ Spills Over to Memory Makers Worldwide

Tuesday’s hefty memory-stock selloff started in Seoul. South Korea’s top-performing stock market plummeted 10.0% on Tuesday, its fall stemmed only slightly as circuit breakers kicked in.

The benchmark Kospi saw its biggest-ever daily drop, with it dubbed “Black Tuesday.” While surely a landmark day’s trade, this kind of volatility is not now all that unusual for Korean stocks.

Consider that we just had “Black Monday” on June 8, when the Korean market plunged 8.3%. In fact, this is the fourth time this year that circuit breakers have kicked in, as they do to temporarily halt major moves in either direction.

Rotation, or Another Rally?

After Black Monday, the Kospi rebounded a similar amount the next day. The question now is, is this another temporary setback for memory makers on the relentless rise of the Artificial Intelligence trade? Or is the start of a more significant rotation?

Asian markets are increasingly bifurcated, a sharp divide between winners and losers this year, with implications that I explored in my last column.

Tuesday, at least, the winners are the losers. South Korea’s stock market is up a world-leading 94.7% even after Tuesday’s correction. So this course check is also the largest worldwide.

The two largest components of the Korean market are the major movers. Samsung Electronics (KR:005930) is down 12.1% Tuesday—but still up 158.5% so far this year. Rival SK Hynix (HXSCL) (KR:000660) is down 14.2% for Tuesday, but up a whopping 292.5% in 2026.  

Tokyo Benefits From Tech Plays

The Nikkei 225 in Tokyo is next, with a 3.6% selloff on Tuesday. It is still sitting on a 38.6% gain this year. The broader Topix lost 2.6% but is up 17.1% in 2026, with export profits magnified by the weak Japanese yen, interest rates at just 1.0%, and the administration of Prime Minister Sanae Takaichi pushing market-friendly policies.

The blue-chip Nikkei has also benefitted from memory-linked plays like chipmakers Tokyo Electron (TOELY) (T:8035) and Renesas Electronics (RNECY) (T:6723), and the chip-testing equipment maker Advantest, my stock of the year from Asia.

The story is the same as in Seoul. Tokyo Electron took a 6.2% knock to the chin Tuesday, but is up 112.6% year to date. Renesas, formed by the combination of the chip businesses of Hitachi (HTHIY) (T:6501), Mitsubishi Electric (MIELY) (T:6503) and NEC (NECPY) (T:6701), is down 5.7% Tuesday but up 122.1% on the year. Advantest is slightly shielded Tuesday, down 2.3%, but its gains have also been more measured, up “just” 60.1% year to date — still a showing that I’m very happy with, and a holding that should continue to profit the rest of this year.

Taiwan Insulated Due to Hardware Emphasis

The other main East Asian winner in 2026 is the Taiwan market. On the back of market heavyweight Taiwan Semiconductor Manufacturing Co. (TSM) (TW:2330), the Taiex is up 62.6% in 2026, with a 1.3% correction Tuesday. TSMC dipped 0.8% on Tuesday, but remains up 60.6% this year.

So the heavy selling has been highly concentrated in memory-chip makers and AI plays. Even Advantest, making the hardware to test those chips, and TSMC, with a dominant 73% control of the foundry market for the physical production of chips, are insulated.

Wild Swings in DRAM Price

We can see the effects in the Roundhill Memory ETF (DRAM), down 12.6% Tuesday as I write. It has a concentrated exposure to 10 chipmakers, with Samsung, Hynix and U.S. rival Micron Technology (MU) making up almost 75% of the exposure.

DRAM started trading in April at $26.14. It has since shot up as high as $81.60 on Monday. I’ve suggested trading in and out of DRAM due to the volatility in Korea, which is magnified by the popularity of single-stock exchange-traded funds focused on Samsung and Hynix.

There are 16 newly listed single-stock leveraged ETFs trading in Seoul, where high gearing is seen as a catchup play for retail investors scared they’re missing out. The ETFs started trading on May 27, providing leveraged 2x exposure to Samsung Electronics and Hynix, 14 of them on the long side and two on the short side. We know that past financial crises tended to stem out of overborrowing, so this latest development is scary.

It also means that DRAM will continue to see extreme volatility. My call to sell last Wednesday at $71.50 after a strong day, locking in a 15.5% profit on a position averaged at $61.90 from earlier in June, looked pretty silly as DRAM continued its march higher. But it is back below my sale price now, given Tuesday’s descent.

When Will ‘Buy on the Dip’ Stop Working?

Should we buy on Tuesday’s dip? I’m sure some of Tuesday’s downward pressure is “sell on the news” ahead of Micron’s earnings on Wednesday. MU shares are down a hefty 11.0% as I write, but only after adding 23.4% last week, through Monday’s close. Micron has almost quadrupled this year.

There will come a time, as I’ve noted before, when memory maker earnings will disappoint. Will we have a “Micron moment” after Wednesday?

My instincts say “No,” and that Tuesday is a short and necessary correction. It’s surely amplified by the hefty leverage that retail investors have taken on in Korea. It is going to take earnings disappointment from highly profitable memory makers to truly shake investor confidence in the chipmaker bull market.

But that moment will come. How close to the top do we stand?

At the time of publication, McMillan had long positions in TSM and DRAM.