AI's Bad Night in Seoul
This morning's tech selloff began in Korea, where investors seem to have noticed that the most valuable companies on earth depend on a handful of physical chokepoints and an imaginary payoff.
This is not investment advice; I’m just a reporter who gets asked on TV to explain the business case for AI, and is increasingly having trouble doing it.
While New York was asleep, traders in Seoul were fighting for their lives last night. South Korea’s KOSPI fell about 10 percent, led down by Samsung and SK Hynix, the two firms that make most of the world’s memory chips. By the time the opening bell rang here, the contagion had crossed to our shores. The Nasdaq dropped around two and a half percent, and a trillion dollars of American market value bled out.
Why should a bad day on a Korean exchange cost Nvidia anything here? Because the whole AI industry balances on a small number of physical chokepoints, and Seoul holds one of them. Memory chips come from Korea. The advanced logic — chip jargon for the processors that do the computing — comes from a single company in Taiwan. The rare-earth elements get refined almost entirely in China. Three weeks ago the Nasdaq fell 4.18 percent in a single day, its worst since April 2025, seemingly on the same nerves. Investors are taking a new look at the AI industry and asking what exactly their money buys.
Fair question, because on paper, the industry doesn’t make much sense. A widely cited 2025 MIT study found that something like 95 percent of organizations pouring cash into generative AI have gotten nothing back. Five companies now account for close to a third of the entire S&P 500, a concentration the market hasn’t seen in half a century. And there’s another wall looming.
A June report from the Carnegie Endowment added up every nuclear deal the big AI companies have signed, assumed all of it gets built on schedule, and found it would still cover less than a fifth of the power the industry expects to need by 2035. So how on earth will all this pencil out? And if the bet comes up short, whose lights get more expensive?
