Kevin Warsh’s hawkish remarks as Chair of the U.S. Federal Reserve slammed global semiconductor stocks on August 31, sending South Korea’s Samsung Electronics and SK Hynix tumbling more than 3% in tandem during early trading. Samsung Electronics shares slid into the 240,000-won range as investor sentiment deteriorated sharply.

As of 9:13 a.m. KST, Samsung Electronics was trading at 248,250 won, down 8,750 won (3.40%) from the previous session on the KOSPI market. SK Hynix fell 53,000 won (3.21%) to 1.6 million won (approximately $1,200). Both stocks also opened down more than 3% in Nextrade’s pre-market session, foreshadowing the weak trend.

The direct catalyst was Warsh’s keynote address at the Jackson Hole Economic Symposium in Wyoming on August 28 (local time). “While this summer’s PCE and CPI readings came in better than expected, I cannot say that the underlying inflation trend has improved meaningfully,” he said. He added, “We need to be confident that trend inflation is moving clearly and at sufficient speed toward our target. Otherwise, we have work to do.”

Markets interpreted this as a signal of potential additional tightening. According to the CME FedWatch Tool, the probability of a 25-basis-point rate hike at the September FOMC meeting surged to 57.5% — up more than 20 percentage points from 35.4% the previous day, far outpacing the 42.5% probability of a hold.

U.S. Treasury yields rose across the board. The 2-year yield jumped 11.8 basis points (1bp = 0.01 percentage point) to 4.348%, its largest single-day increase since March. The 10-year yield rose 5.0 basis points to 4.72%.

On Wall Street, the Philadelphia Semiconductor Index plunged 3.47%, amplifying losses across the tech sector. Nvidia, which had surged 8.74% the previous day on strong earnings, reversed course and fell 4.57%. Marvell Technology cratered 10.28%. SK Hynix ADRs slipped 0.35%, while Micron (-0.27%), Western Digital (-0.55%), and Seagate (-2.06%) also traded mostly lower. The Dow Jones Industrial Average closed down 0.02%, the S&P 500 fell 0.25%, and the Nasdaq Composite declined 0.52%.

Beyond Warsh’s comments, the semiconductor sector faced a confluence of headwinds. China’s CXMT reported first-half revenue surged 874% year-over-year, heightening concerns about intensifying competition. Morgan Stanley projected CXMT’s full-year revenue at 388.9 billion yuan (approximately $57.9 billion). UBS, however, noted that Chinese DRAM makers remain two to three generations behind global leaders in technology.

Adding to the pressure, reports emerged that U.S. President Donald Trump is considering imposing steep tariffs on finished goods including semiconductors. The U.S. Commerce Department is reportedly favoring a quota system tied to company-specific U.S.-produced semiconductor volumes.

Suh Sang-young, a managing director at Mirae Asset Securities, said: “As the market digested Warsh’s remarks and long-term yields rose, selling pressure increased in AI semiconductor and theme stocks, weighing on the index. The semiconductor selloff subsequently widened as investors priced in rising rates, U.S. semiconductor tariff and export control uncertainty, and competitive concerns highlighted by CXMT’s results.”

Samsung Electronics had climbed to 281,500 won at the close on August 21, but has since declined steadily amid disappointment over shareholder return policies and the fallout from the Bank of Korea’s rate hike. SK Hynix closed at 1.73 million won (approximately $1,300) on August 27 following its announcement of a 40 trillion won (approximately $29.0 billion) share buyback and cancellation program, but plunged 4.45% the next day and continued to face downward pressure.

Meanwhile, Han Ji-young, a research analyst at Kiwoom Securities, said: “Warsh’s remarks were interpreted as hawkish, but given that the declines in the three major U.S. indices on Friday were limited, this does not appear to be a shock beyond the market’s capacity to absorb.” He forecast that the KOSPI would attempt to reclaim the 7,000 level this week, influenced by earnings from U.S. tech companies including Broadcom and Dell, as well as South Korea’s August trade data and subsequent shifts in semiconductor stock supply and demand.

Asian markets broadly failed to escape the fallout from Warsh’s remarks. Japan’s Nikkei index fell more than 1,500 points at one point during the session, while the KOSPI plunged 2.58% immediately after the open before paring some losses.

Warsh’s hawkish signal also fueled dollar strength. The dollar index rose as high as 99.727 intraday, pushing the yen back above 160 per dollar. The 160-yen level has been viewed by markets as a psychological threshold that raises the likelihood of intervention by Japanese authorities.

U.S. Treasury Secretary Scott Bessent, in an interview with Reuters on August 30, characterized the recent yen movements as “fairly well-controlled,” drawing a line between current conditions and the disorderly moves that triggered the U.S.-Japan joint intervention on July 31. He described Bank of Japan Governor Kazuo Ueda as “a great economist I’ve known for 15 years,” adding that “his insight into markets is underappreciated.”

Bessent assessed that Japan has already “conquered” deflation and has transitioned to so-called “Takaichinomics” under Prime Minister Sanae Takaichi. “Abenomics was a reflation program, and I think we’ve probably reached the end point of that,” he said. The Bank of Japan faces a monetary policy meeting on September 17-18, with markets having almost fully priced in the possibility of an additional rate hike in September.

Key indicators and stock movements are summarized in the table below.

Indicator/StockChangeNotesPhiladelphia Semiconductor Index-3.47%Aug 28 (local time)Nasdaq Composite-0.52%Aug 28 (local time)Nvidia-4.57%Reversal from prior day’s +8.74%Marvell Technology-10.28%Largest decline among chip stocksSamsung Electronics-3.40%Aug 31, early sessionSK Hynix-3.21%Aug 31, early sessionU.S. 2-year Treasury yield+11.8bp4.348%, largest rise since MarchU.S. 10-year Treasury yield+5.0bp4.72%

Note: Percentage changes are versus the prior trading day at each respective time point. Exchange rate of 1,400 won per dollar applied.

The sharp selloff is best understood as the result of a triple whammy — the Fed’s tightening signal, semiconductor tariff uncertainty, and the emergence of a Chinese competitor — hitting simultaneously rather than any single factor. Given the weight of Samsung Electronics and SK Hynix in South Korea’s market capitalization, investors’ reassessment of the semiconductor cycle and the monetary policy path is likely to dictate the KOSPI’s direction for the foreseeable future.