Seoul: South Korean stocks closed more than 1 percent lower Monday as investors offloaded technology shares amid uncertainties in the semiconductor and artificial intelligence (AI) sectors. The local currency fell against the U.S. dollar.

According to Yonhap News Agency, the benchmark Korea Composite Stock Price Index (KOSPI) plunged 43.08 points, or 1.35 percent, to close at 3,142.93. Trade volume was slim at 258.1 million shares worth 7.9 trillion won (US$5.7 billion), with losers beating gainers 692 to 201. Foreigners sold a net 272 billion won, becoming net sellers for five straight sessions. Individuals bought a net 346 billion won, while institutions sold a net 193.2 billion won.

Analysts said investors rushed to offload tech stocks on reports that China’s Alibaba has developed a new AI chip, raising concerns the move could trigger another global market shock. Earlier this year, tech stocks faced a global sell-off after Chinese AI startup DeepSeek unveiled its AI chatbot.

“Samsung Electronics and SK hynix also led the overall losses following the announcement of new regulation by the U.S. Commerce Department aimed at their units in China,” said Seo Sang-young, an analyst at Mirae Asset Securities. Last week, Washington announced a plan to strip Samsung and SK hynix of “validated end-user (VEU)” status, a move that will require them to secure licenses for sending certain U.S. chipmaking equipment to their plants in China.

During the previous Biden administration, the two companies were designated as VEUs, a status that reduces the licensing burden on the firms by allowing them to ship certain U.S. semiconductor equipment to pre-approved sites under a general authorization instead of individual export licenses. Top market cap Samsung Electronics sank 3.01 percent to 67,600 won, while No. 2 chipmaker SK hynix dipped 4.83 percent to 256,000 won.

Kakao, which operates the country’s most popular mobile messenger app KakaoTalk, decreased 2.08 percent to 61,200 won after prosecutors last week sought a 15-year prison term for the firm’s founder on charges of stock manipulation related to its takeover of K-pop agency SM Entertainment. KB Financial lost 1.02 percent to 107,100 won, and Shinhan Financial lost 1.99 percent to 64,000 won.

The local currency was quoted at 1,393.7 won against the greenback at 3:30 p.m., down 3.6 won from the previous session.