Key Takeaways:
Memory chip stocks tumbled Tuesday after a top South Korean official floated the idea of a new tax on artificial intelligence profits, sparking a selloff that erased more than $300 billion in market value from the Korean benchmark index at its low. SanDisk (NASDAQ:SNDK) shares fell 9% to $1,405, leading the downturn.
"Some big overnight market moves came with a sharp drop in the KOSPI as a senior official floated the idea of a ’citizen dividend’ on AI profits, which has also weighed on tech sentiment overnight," Deutsche Bank analyst Peter Sidorov commented.
The proposed tax, suggested in a Facebook post by presidential policy chief Kim Yong-beom, sent shockwaves through the semiconductor sector. In South Korea, Samsung Electronics (KS:005930) fell 4% and SK Hynix dropped 4%. The selling pressure extended to U.S. markets, with Micron Technology (NASDAQ:MU) also declining 9%, Western Digital (NASDAQ:WDC) down 8%, Nvidia (NASDAQ:NVDA) slipping 0.75%, and Advanced Micro Devices (NASDAQ:AMD) dropping 2%.
While Kim later clarified his remarks were a personal opinion and not formal policy, the market's sharp reaction highlights investor sensitivity to potential profit-sharing measures targeting AI beneficiaries. The incident introduces a new risk for the high-flying memory sector, which has been a primary beneficiary of the global AI infrastructure boom.
The selloff began after Kim Yong-beom, South Korea’s presidential policy chief, proposed using taxes on profits from AI to fund a "citizen dividend." The suggestion, made on social media, was aimed at ensuring the benefits of the AI era are shared more broadly. An official at the president’s office later clarified the remarks represented Kim's personal opinion and were not part of formal government discussions.
Following the clarification, the Kospi index, which had been down as much as 5.1%, recovered to close down 2.3%. The initial proposal, however, underscores a growing global debate about how to distribute the immense wealth being created by AI technologies. For investors, it represents a new layer of political risk for companies at the heart of the AI boom.
Memory and storage chipmakers like SanDisk, Micron, and SK Hynix are critical to the AI supply chain. Their high-performance products are necessary to store and move the massive datasets that power AI models, turning what was once a commoditized market into a strategic growth area.
SanDisk's stock has been a top performer, rocketing over 557% this year before the recent pullback, fueled by record revenue from AI-driven storage contracts. The sharp decline on the tax proposal shows how quickly sentiment can turn, even for companies with strong fundamental tailwinds. The episode serves as a reminder that beyond competition and execution, geopolitical and regulatory risks remain a key factor for the semiconductor industry.
This article is for informational purposes only and does not constitute investment advice.
