The benchmark KOSPI closed at 6,471.17, down 5.80 percent from the previous session, after falling as low as 6,400.81 during the day.
Losses were widespread, with just three stocks advancing against 703 decliners, while 32 finished unchanged.
Foreign investors sold a net 3.49 trillion won of KOSPI shares, while institutions unloaded 1.32 trillion won. Retail investors absorbed much of the selling, purchasing a net 4.64 trillion won.
The steep decline followed a broad retreat in U.S. technology and semiconductor stocks overnight, with the Dow Jones Industrial Average falling 0.22 percent, the S&P 500 losing 0.69 percent and the Nasdaq Composite dropping 1.33 percent.
The selloff was more pronounced among chipmakers. Micron Technology plunged 7.02 percent and Intel fell 6.58 percent, while SK hynix's U.S.-listed American depositary receipts sank 9.20 percent. The Philadelphia Semiconductor Index slid 4.98 percent.
The weakness quickly spilled over into Seoul, where the market's two semiconductor heavyweights suffered some of the steepest losses among large-cap stocks.
Samsung Electronics plunged 7.82 percent to 247,500 won, while SK hynix sank 9.75 percent to 1,500,000 won. Foreign selling was heavily concentrated in the pair, with overseas investors unloading a net 1.04 trillion won and 1.83 trillion won of their shares, respectively. Together, they accounted for more than 80 percent of total foreign net selling on the KOSPI.
Analysts attributed the decline to profit-taking after the chip sector's recent sharp rebound, with weakness spreading across global memory stocks. Japan's Kioxia Holdings also closed 12.60 percent lower at 49,950 yen.
Losses extended beyond the two chip heavyweights. SK Square tumbled 11.54 percent to 1,004,000 won, Samsung Electronics preferred shares fell 7.75 percent to 173,700 won, Hyundai Motor lost 4.83 percent to 414,000 won and Samsung Electro-Mechanics declined 3.68 percent to 1,387,000 won. KB Financial slipped 1.25 percent to 166,400 won.
A handful of large caps bucked the selloff. Hanwha Aerospace gained 2.71 percent to 1,177,000 won, LG Energy Solution rose 1.85 percent to 357,500 won and Samsung Biologics added 0.85 percent to 1,544,000 won.
Wednesday's plunge deepened a reversal that began in the previous session. The KOSPI had surged as high as 7,216.62 Tuesday before giving up its gains to close 1.55 percent lower at 6,869.83, with the latest drop pushing it further away from the 7,000 mark.
The junior KOSDAQ proved more resilient, falling 1.17 percent to close at 824.46.
Foreign investors bought a net 14.8 billion won of KOSDAQ shares and institutions purchased 49.9 billion won, while retail investors sold a net 71.6 billion won.
Performance among major KOSDAQ stocks was mixed. Biotech firm Alteogen gained 1.85 percent to 303,500 won, while battery materials maker EcoPro BM rose 0.64 percent to 109,800 won. Semiconductor component maker Leeno Industrial edged up 0.15 percent to 67,900 won, while chip equipment maker EO Technics added 0.24 percent to 415,000 won.
On the downside, battery materials holding company EcoPro fell 1.03 percent to 86,200 won and robot maker Rainbow Robotics lost 1.60 percent to 462,500 won. Biotech firms HLB and ABL Bio declined 2.43 percent to 42,100 won and 0.13 percent to 79,700 won, respectively, while semiconductor equipment makers Jusung Engineering and Wonik IPS dropped 4.29 percent to 171,600 won and 2.76 percent to 109,300 won.
Meanwhile, the Korean won strengthened despite the stock market rout, trading at 1,397.70 won, compared with 1,411.80 won in the previous session. It fell below the 1,400-won mark for the first time in about 10 and a half months, as expectations for a Federal Reserve rate hike next month eased.
Across Asia, Japan's Nikkei 225 tumbled 3.16 percent to 65,326.42 as elevated bond yields and a global selloff in technology and semiconductor shares weighed on sentiment.
China's Shanghai Composite dropped 2.40 percent to 3,894.42, pressured by losses in semiconductor and robotics shares amid concerns over the economic outlook and corporate earnings. Hong Kong's Hang Seng Index bucked the regional decline, edging up 0.10 percent to 25,497.52.
AJP Takeaways
• South Korea's benchmark KOSPI fell 5.80 percent to 6,471.17 on Aug. 19, 2026, as a global semiconductor selloff hit major chip stocks.
• Samsung Electronics plunged 7.82 percent to 247,500 won and SK hynix fell 9.75 percent to 1.5 million won, with the two stocks accounting for more than 80 percent of foreign net selling on the KOSPI.
• South Korea's KOSDAQ declined a milder 1.17 percent to 824.46, while the Korean won strengthened to 1,397.70 per U.S. dollar, breaking below 1,400 for the first time in about 10 and a half months.
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