- SK Hynix shares have plunged 45% from their all-time high in June due to concerns about overcrowding and a surge in leverage-induced volatility.
- South Korean chip stocks slumped on Tuesday, with Samsung Electronics and SK Hynix falling as much as 9.5% and 11.1%, respectively, amid worries over AI-related stocks and competition from China.
- Analysts indicated that the selloff reflects concerns over AI infrastructure financing, China's technological advances, and rising competition from Chinese firms.
- Chinese memory-chip maker CXMT's strong stock-market debut has fueled concerns about intensifying competition in the global memory industry.
- A $570 billion rout in just over a month has turned from one of the world’s hottest AI trades into one of the biggest portfolio question marks.
- Reports indicate that Chinese companies are developing domestic deep ultraviolet (DUV) lithography equipment, raising concerns that Chinese memory makers could accelerate capacity expansion.
SK Hynix's shares have experienced a dramatic 45% decline from their all-time high in June, closing at $143.02, below the initial public offering price of $149. This downturn is attributed to growing concerns over AI infrastructure financing and intensifying competition from Chinese memory chip manufacturers.34
The selloff reflects a broader trend in the South Korean chip market, where stocks like Samsung Electronics also faced significant losses, with declines of up to 9.5%. Investors are increasingly wary of the financial risks associated with AI spending, particularly as reports emerge of Chinese companies advancing in technology, such as developing domestic deep ultraviolet (DUV) lithography equipment. Han Ji-young, an analyst at Kiwoom Securities, noted that these developments could lead to accelerated capacity expansion among Chinese memory makers, further intensifying competition in the global memory market.26
Additionally, a Wall Street Journal report indicated that Nvidia might provide a $250 billion financial backstop for an OpenAI data-center project, raising questions about the AI chip leader's financing strategies. This uncertainty has contributed to a broader retreat from AI-related stocks, as investors reassess the sustainability of the sector amid rising competition from firms like CXMT, a Chinese memory-chip maker that recently had a strong stock-market debut.
“Shares of SK Hynix closed at $143.02, below their $149 IPO price, reflecting a broader selloff in South Korean chip stocks. Analysts highlight fears over financing risks tied to AI infrastructure and competition from Chinese firms, particularly with CXMT's strong market debut.”
CNBC
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