Hynix Semiconductor closed nearly 6 percent lower at 19,700 won, after a share offer by its creditors was sold at a deep discount. Local institutions rushed to book profits ahead of settlement.
But foreign investors bought more than they sold for the first time in 25 sessions, raising hopes they may regain their appetite for local shares.
The benchmark Korea Composite Stock Price Index (KOSPI) fell 1.07 percent to end at 1,166.36. "Technology stocks with ties to the United States are getting hit by worries over rising US interest rates," said Kim Jun-nyun, a fund manager at Chohung Investment Trust Management.
US stocks fell on Wednesday, as the benchmark bond yield hit its highest in seven months on renewed concerns about inflation and interest rates. The United States takes in around one-fifth of South Korea's total shipments.
Tech issues were also hit by worries about the sector's outlook in the region, fund managers said.
Earnings out on Thursday, including chip-testing equipment maker Advantest Corp in Japan and microchip maker United Microelectronics Corp in Taiwan, proved disappointing.
Samsung Electronics Co Ltd, the world's top maker of memory chips, fell 0.89 percent to 558,000 won, while LG.Philips LCD Co Ltd, the world's second-biggest maker of flat panels, fell 2.53 percent to 38,500 won.
Hyundai Motor Co rose 1.73 percent to close at 76,500 won after it predicted sales and recurring profit margins would hit record highs in the fourth quarter. The stock had dropped 1.7 percent at one point amid disappointment over its third-quarter operating profits.