U.S. Long-Term Treasury Yields Surge... AI Investment Fears Shake Samsung Electronics and SK hynix

Sidecar Triggered as KOSPI Plummets
U.S. 30-Year Treasury Yield Hits 19-Year High at 5.33%
“Steepening” as Short- and Long-Term Yields Diverge

As of August 19, 2026, domestic stock markets are plunging as U.S. Treasury yields hit their highest levels in 19 years. The surge in U.S. Treasury yields, driven by massive debt financing, is exerting pressure on hyperscaler companies that have aggressively expanded capital expenditures for artificial intelligence (AI) infrastructure. There are growing concerns that this shock could spill over to Samsung Electronics and SK hynix, Korea’s top two semiconductor players.

On the 19th, as the KOSPI plunged more than 6% in the early session triggering a temporary suspension of program sell orders (sidecar), the KOSPI, Samsung Electronics, and SK hynix indices were displayed in the dealing room of Hana Bank headquarters in Jung-gu, Seoul. Photo by Jo Yongjun

On August 19, the KOSPI opened at 6,528.77, down 4.96% from the previous trading session, and by 10:00 a.m. was trading at 6,489.59, a decline of 5.53%. The KOSPI triggered a temporary suspension of program sell orders (sidecar) in the early session. During the same period, the KOSDAQ was trading at 828.98, down 0.63%. Shares of Samsung Electronics and SK hynix fell by 6.89% and 8.48%, respectively.

Overnight, the U.S. New York stock markets closed sharply lower. On August 18 (local time), the Dow Jones Industrial Average closed at 53,343.40, down 116.38 points (0.22%) from the previous session. The Standard & Poor’s (S&P) 500 Index finished at 7,691.76, down 53.30 points (0.69%), while the technology-heavy Nasdaq Composite ended at 26,289.71, a drop of 355.20 points (1.33%) from the previous session. Notably, AI and semiconductor stocks saw steep declines. Shares of Micron Technology fell 7.06%, SanDisk dropped 8.89%, and Western Digital lost 7.43%. SK hynix American Depositary Receipts (ADR) tumbled 9.20%, and the Philadelphia Semiconductor Index slid 4.98%.

The extension of a ceasefire agreement between the U.S. and Iran collapsed, escalating geopolitical risks in the Middle East, which, alongside rising oil prices, heightened inflationary pressures. The yield on the 30-year U.S. Treasury rose as high as 5.33% during trading, marking its highest level since 2007—that is, in 19 years. The global benchmark, the 10-year Treasury yield, also climbed to 4.71%. Meanwhile, the yield on the 2-year Treasury, which is sensitive to monetary policy, stayed at 4.17%, down 0.4 basis points from the previous day. International oil prices rose for a third consecutive day, with both Brent and WTI futures reaching their highest levels since late July.

This environment, in which short-term rates are falling but long-term rates remain elevated, has resulted in a pronounced steepening of the yield curve—the “steepening” phenomenon. This implies that even if the Federal Reserve keeps its policy rate unchanged or cuts rates, financial conditions may not ease significantly. This is because corporate bond issuance rates and long-term loan rates are more heavily influenced by long-term market rates such as the 10-year or 30-year Treasury yields, rather than policy rates. Thus, even without additional rate hikes by the Fed, persistently high long-term Treasury yields raise financing costs for households and companies, effectively tightening financial conditions.

The yield on the 30-year Treasury surpassing 5.33% is attributable less to economic outlook and more to a supply-demand imbalance from a surge in long-term bond issuance and depleted demand. Despite the decline in employment and consumption weakening the case for further Fed tightening, a supply-demand imbalance is preventing long-term rates from coming down. In fact, in the long-term U.S. Treasury futures options market, put option premiums betting on lower bond prices (higher long-term rates) remain high, indicating strong caution about additional selling in long-duration bonds.

Additionally, the correlation between the term premium (the excess yield required for holding long-term bonds) and oil prices has risen significantly this year. NH Investment & Securities explained, "The sharp jump in the 30-year Treasury yield is the result of a complex interaction of concerns over rising fiscal deficits, an oversupply of long-term bonds, inflation fears, and weakening demand from buyers—what can be called a 'fiscal and supply premium.'"

This surge in yields is directly pressuring hyperscaler companies that have continued investing heavily in AI infrastructure. According to NH Investment & Securities, hyperscalers’ bond issuances have soared from an annual average of $28 billion between 2020 and 2024, to $121 billion in 2025, to a cumulative $165 billion since the start of 2026. The total is expected to reach $400 billion this year. As investment sizes have swollen, structural reliance on external funding through the bond market has increased significantly.

The problem lies in the changing attitudes of capital providers (creditors). KB Securities noted, “While companies themselves may not stop investing, external capital providers can.” Hyperscaler companies remain optimistic about explosive returns (“success equals a jackpot”), but capital providers are more sensitive to the risk of principal loss in the event of project failures (“failure equals principal loss”). As such, capital providers prioritize the company’s free cash flow (FCF) and ability to service interest payments over sales growth or investment size. Surging interest rates increase borrowing costs, bringing financial risks to the forefront.

In fact, Oracle, which has a high ratio of external financing, saw the premium on its 5-year credit default swaps (CDS)—an indicator of credit risk—spike in tandem with rising Treasury yields. Should market concerns over funding lead to a reduction in AI investments by hyperscalers, the demand base for Samsung Electronics and SK hynix, the key suppliers of AI memory semiconductors, will inevitably weaken.

Ji-Yong Han, researcher at Kiwoom Securities, analyzed, "The recent surge in long-term interest rates in advanced economies is due to increased duration risk from expanded long-term bond issuance and a rise in term premiums. Government bonds to finance fiscal deficits and corporate bonds issued by hyperscalers for AI investments are soaring, but the supply of long-term capital from central banks and insurers is not keeping pace, prompting markets to demand higher rates."

This content was produced with the assistance of AI translation services.