SK Hynix (HXSCL), a South Korean memory-chip maker and major supplier of high-bandwidth memory for NVIDIA's artificial-intelligence processors, recorded its largest-ever decline of 15% on Monday as investors reassessed the strength of South Korea's AI-driven stock rally. The selloff pushed the Kospi index down 9% and triggered a market-wide trading suspension, while Samsung Electronics (SSNLF), a major South Korean electronics and memory-chip company, declined nearly 11%. Foreign investors sold 1.7 trillion won, equivalent to approximately $1.1 billion, of Kospi-listed shares during the session, with SK Hynix accounting for most of the selling. The decline reduced SK Hynix's market capitalization to $875 billion, less than two months after the company entered the $1 trillion valuation group. Samsung's market value also dropped below $1 trillion, with both companies now trading at least 30% below the record levels reached last month.
Investors also focused on SK Hynix's $26.5 billion U.S. offering and the Friday debut of its American depositary receipts, which gained 13% during their first trading session. The transaction attracted orders exceeding the number of available shares by more than seven times, suggesting that international demand for the company remained substantial despite concerns over AI valuations and industry spending. Chan H Lee, managing partner at Seoul-based hedge fund Petra Capital Management, said the weakness appeared to reflect profit-taking and a typical sell-the-news response rather than a change in the company's fundamentals. However, sentiment was also affected by a Korea Investment & Securities report estimating that SK Hynix's operating profit for the latest quarter could fall 8% below market expectations. The South Korean brokerage attributed the possible shortfall to SK Hynix's high exposure to high-bandwidth memory, where pricing is increasing more slowly than in conventional memory products.
The pressure extended into the U.S. market, where SK Hynix's depositary receipts fell approximately 9% in premarket trading, while Micron Technology, a U.S. memory-chip manufacturer, declined 5.8% and Sandisk, a U.S. data-storage company, fell 6.8%. SK Hynix has continued to attract global investor interest because of its role supplying high-bandwidth memory used with NVIDIA NASDAQ:NVDA, a U.S. chip designer focused on processors for artificial-intelligence computing. The company's Korean-listed shares remain more than 500% higher over the past year as memory shortages and rising prices have supported record earnings. SK Hynix Chief Executive Officer Kwak Noh-Jung said memory-chip shortages would probably continue beyond 2030, although investors remain concerned that expanding production capacity could eventually pressure profitability if demand weakens. MRM Research analyst Nico Rosti described SK Hynix shares as deeply oversold and suggested that another week of declines could present a buying opportunity, while Julius Baer research head Richard Tang expects elevated volatility through late July as foreign investors rebalance positions, rotate into the U.S.-listed receipts and take profits from strongly performing memory stocks.