Over the past month, the South Korean stock market staged a real-life financial massacre more absurd than "The Big Short."
In just two trading days at the end of July, the KOSPI index triggered circuit breakers twice in a row, with intraday declines exceeding 12%. From a historical high of 9385 points on June 19 to 6200 points in early August, it wiped out a year's worth of GDP in a month.
This wasn't a slow bearish decline; it was a vertical plunge, directly grinding leveraged retail investors into the ground.
Over 1.2 million leveraged accounts hit margin call lines, with 320,000 to 360,000 accounts forced into liquidation by brokerages, leaving many retail investors not only losing their principal but also owing debts to their brokers.
The Financial Services Commission hastily rolled out family suicide prevention measures and opened a unified debt counseling hotline—because following the stock market crash, there have already been multiple extreme incidents related to investment losses.
South Korea holds the ace in the AI era: SK Hynix accounts for 57% of the global HBM market, Samsung for 22%, and the two together monopolize nearly 80% of high-performance memory production capacity, making them NVIDIA's most critical suppliers in the GB300 era.
In the first half of the year alone, South Korean semiconductor exports surged by 160%. Just in June, exports to the U.S. were about $6.5 billion, a staggering increase of 377%.
As the ones who should be lying back and making easy money selling shovels during the AI gold rush, how did they end up in the ICU themselves?
Apparent Global Monopoly, But the Lifeline is in America's Hands
"Global market share of 80%"—it seems like South Korea should have a stranglehold on AI computing power, right? But the key issue is that what South Korea holds is production capacity, not pricing power; it's the manufacturing link, not control over demand rhythms.
This HBM stuff, who places the orders? NVIDIA, Google, Meta, Microsoft. Who decides whether to expand or contract capital expenditure? The U.S. AI giants.
South Korean memory manufacturers are essentially high-end foundries: when customers increase orders, you have to spend money to expand production; when customers cut orders, you have to reduce output and lay off workers. Whether prices rise or not, and by how much, doesn't depend on your manufacturing costs, but on the budget considerations of your American clients.
Even more critically, the South Korean stock market has bet all its chips on these two companies.
The entire AI narrative on KOSPI is essentially a one-man show by Samsung and SK Hynix. The index's rise and fall depend entirely on these two stocks, whose prices are wholly dependent on the sentiment of U.S. AI capital expenditure.
It's as if all of South Korea's retail investors pooled money to add leverage, betting on whether American tech giants are still willing to spend money building computing clusters next year.
This isn't a national stock market; it's a ten-times-leveraged NVIDIA concept stock option. When it rises, it's a nationwide狂欢; when it falls, it's a collective stampede, with no window to escape.
The more concentrated the capacity, the deeper the dependence on downstream; the deeper the binding to America, the more it hurts when the harvest comes.
A Textbook Harvest: Inflate the Bubble, Stick the Knife, Pick Up the Chips
If it were just normal industry cycle fluctuations, that would be one thing. But the timing of this crash is eerily precise. Keep in mind, a significant portion of the shares of leading stocks like Samsung Electronics and SK Hynix are controlled by foreign capital, particularly Wall Street capital. Nearly 50% of the stocks of Samsung and Hynix are held by American entities.
Who is the biggest market maker in the South Korean stock market? It's hardly a mystery.
This playbook is Wall Street's standard harvesting procedure.
Step one: U.S. capital builds positions at low levels, inflating the bubble. From last year to the first half of this year, Wall Street analysts collectively sang praises, hyping the eternal shortage of memory, spinning tales of "Memory is king in the AI era" and "HBM is the artery of computing power," driving up the stock prices of Samsung and Hynix by nearly tenfold.
In this situation, South Korean retail investors were completely brainwashed: national pillar industry, global monopoly, buy blindfolded and still make money. South Korea launched a whopping 16 single-stock leveraged ETFs in one go, including "Double Long Hynix" and "Double Long Samsung Electronics."
So the whole nation leveraged up and charged in, with margin debt soaring relentlessly. Even university students and office workers borrowed money to speculate.
Once retail investors were sufficiently saddled with high-priced shares, step two: precisely release negative news.
First, on June 25, a U.S. court formally accepted the memory price manipulation lawsuit. They're going to investigate Samsung and Hynix to death. If price manipulation is confirmed, fines could reach tens of billions of dollars. Even if nothing is found, you can't raise prices arbitrarily anymore, and your stock price has to come down.
At the end of June, a U.S. court initiated a patent infringement investigation against Samsung, wielding the Section 337 investigation club. The worst-case scenario is a direct ban on Samsung memory products entering the U.S.
Then the U.S. Secretary of Commerce publicly named names, demanding that Samsung and SK Hynix increase investment in the U.S. and relocate high-end production capacity to America.
Even more blatant was the revelation by The Korea Times: U.S. officials privately laid it out to the Korean Ministry of Trade, Industry and Energy that America would take a cut of the super profits earned by Samsung and Hynix—the reasoning was simple: the orders all come from American companies, you're making a killing, what's wrong with sharing some of the profits?
After this series of combination punches, the market makers unloaded at high levels, the stock price crashed, leveraged positions exploded in a chain reaction, and retail wealth was collectively zeroed out.
Koreans who entered at the high took the last pass, and the market makers casually picked up these "blood-stained chips" at the lows. In the process of rising and falling, the excess profits were swept away by American capital, while the local populace bore all the risk.
In America's eyes, no matter how impressive Samsung and Hynix are, they're just foundry labor earning processing fees. It's fine to earn money working, but if you start earning more than the boss, then the boss will start cracking down.
This plot looks all too familiar to the Japanese.
Back in the 1980s, Japanese semiconductors were at their peak, with an 80% global market share in DRAM. Intel was beaten back step by step, almost exiting the memory market entirely. Japanese people then also thought they held the industry's lifeline, even shouting slogans like "using semiconductors to decide the 21st century."
And then? America first swung the anti-dumping club, then used the Plaza Accord to force yen appreciation, and finally forced Japan to sign the U.S.-Japan Semiconductor Agreement, mandating market opening and restricting export prices.
After that series of combination punches, Japan completely exited DRAM mass production, and NAND leader Toshiba Memory was forced to sell, becoming Kioxia.
Now with South Korea, the playbook has been upgraded. Back then they needed trade negotiations and administrative orders; now the financial market alone can complete the harvest.
First inflate your assets into a bubble, then precisely burst it with policy negatives, cash out at the high, then buy back at the lows. The money is taken away, and the reins on the industry are tightened even more firmly.
You say South Korea is an ally? When it comes to industrial interests, allies are the first to be harvested.
America's own NVIDIA and Intel need to make money; AI红利 must first fill their own pockets. You, a mere foundry, want to eat the biggest cake relying on American orders? There's no such good deal.
The Foundry Labor's Fate: Never Dream of Earning More Than the Boss
South Korea's current situation is the AI bubble bursting, which is essentially the inevitable fate of an industry without a voice.
No matter how strong your manufacturing capabilities, no matter how high your market share, if demand, standards, and high-end manufacturing equipment are in others' hands, you will always be the passive one.
When times are good, you might get a sip of soup; when the situation changes, or when you earn too much, you're the first to get cut.
Who shapes market expectations? Again, not South Korea, but the overall narrative of U.S.-China AI competition. The release of an American model, a breakthrough by a Chinese open-source model, NVIDIA chip shipments, whether AI capital expenditure is slowing—any single variable gets transmitted to South Korean memory chip stocks.
It's not that South Korea doesn't understand this, but it has no choice. Its domestic market is too small to support such massive capacity. Without its own end-user ecosystem, it can only attach itself to American tech giants. What appears to be a glorious global memory hegemon is, in reality, a production workshop chained to the American AI industry chain.
The lesson South Korea's stock market bloodbath teaches us is that industrial upgrading cannot just stay at the manufacturing stage. You also need your own end-user brands, your own technology ecosystem, your own domestic demand market, and keep the initiative over the industry chain in your own hands. Otherwise, the bigger you get, the more easily you become a fattened sheep in others' eyes.
South Korea's current stock market disaster is actually the inevitability of the foundry model. Holding what seems like a winning hand, but with all the lifelines in others' hands; a whole nation leverages up to bet on national destiny, only to end up with not financial freedom, but a precisely harvested wealth plunder.
A worker shouldn't dream of earning more than the boss. This applies within a company, and it applies equally in national industrial competition.
This article is from WeChat public account "Redian Weiping" (ID: redianweiping), Author: Wang Xinxi
