SK Hynix shares tumble 11.5% as Asian chip stocks follow U.S. sell-off
SK Hynix fell 11.5% in Seoul trading, mirroring a broader decline in Asian semiconductor stocks after losses in U.S. chip makers.
Shares of SK Hynix dropped 11.5% on the Seoul exchange, erasing an 8% gain recorded the day before. The decline came after the company posted its steepest one-day fall earlier in the week, as investors took profits amid concerns about AI-related spending. Domestic rivals Samsung Electronics fell more than 8%, while Seoul Semiconductor, LG Innotek and Samsung SDI each posted losses ranging from about 3% to 5%.
The weakness spread to Japan, where AI-linked equipment makers such as Advantest and Tokyo Electron fell around 5% and 4% respectively, and SoftBank Group and Renesas Electronics also declined. The regional sell-off tracks a downturn in U.S. semiconductor shares, with Micron Technology, Intel, Lam Research and Advanced Micro Devices all posting declines.
"Today's decline is largely a follow-on to the US session overnight," said Rolf Bulk, head of semiconductor and infrastructure equity research at Futurum Group. He cited a proposed moratorium on new data-center construction in New York and reports that CoreWeave was considering hedges against future memory-price drops as contributing factors.
New York Governor Kathy Hochul recently ordered a temporary halt to large-scale data-center projects while the state develops stricter environmental standards. Bulk told CNBC that the recent weakness reflects profit-taking after a sharp rally rather than a fundamental slowdown, adding that demand for AI infrastructure and memory chips remains strong.
Demand for high-bandwidth memory chips continues to outpace supply, allowing makers such as SK Hynix and Micron to keep pricing power. The sell-off occurred despite strong results from Dutch equipment maker ASML, which raised its full-year sales guidance to 43-45 billion euros and outlined plans to increase production of extreme ultraviolet lithography machines.
Trader Louis Kondratev of XFUNDs noted that semiconductor stocks now represent roughly 20% of the S&P 500, a share that is historically high. He warned that while earnings momentum has been robust, the concentration of gains in semiconductors could lead to a reassessment of valuations.
"Earnings momentum has been very strong, but it's mostly concentrated in semiconductors, and that momentum may begin to slow as valuations find their place," he said.