Samsung Electronics and SK Hynix shares fall over 7% as chip market downturn extends from Wall Street

Shares in Samsung Electronics and SK Hynix saw a dramatic decline on Thursday, negatively impacting South Korea’s benchmark Kospi index. This downturn was largely attributed to a significant downturn in the tech-heavy Nasdaq Composite, which had occurred overnight. Samsung’s stock plummeted more than 7%, while SK Hynix recorded an even steeper drop of over 9% at the market open, erasing billions in market value for the two leading semiconductor manufacturers in Asia.

The declines are noteworthy given that Samsung Electronics and SK Hynix collectively represent approximately half of the Kospi’s total market capitalization, a stark contrast to about a quarter at the end of the previous year. Analysts point out that the performance of these two conglomerates is pivotal, with significant movements in either company’s stock potentially cascading down to impact the entire index. Market analyst observations suggest that before other companies listed on the exchange can respond, the larger tech players dominate the financial narrative with their stock fluctuations.

The broader regional picture also painted a troubling scene, as Hong Kong and Chinese tech shares experienced widespread selling pressure. In Hong Kong, semiconductor-related stocks suffered key declines. Notably, shares of Semiconductor Manufacturing International Corporation, the largest chipmaker in China, fell by more than 11%. Other firms like Hua Hong Grace and Knowledge Atlas Technology faced losses ranging from 14% to 17%. The trend in these markets mirrors the significant sell-off in U.S. chip stocks, particularly notable on Wall Street, where companies such as Micron Technology and Sandisk experienced declines of more than 10% despite impressive gains throughout the year.

Adding complexity to the current situation, SK Hynix’s CEO announced plans for a substantial investment in South Korea, totaling approximately 100 trillion Korean won (around billion). This investment consists of 80 trillion won earmarked for the construction of the M17 fabrication plant, expected to produce NAND flash memory, as well as a focus on developing AI data center infrastructure across the nation.

As the semiconductor industry faces mounting pressures from external market dynamics, the future strategies of these companies will be closely watched by investors looking for signals of recovery.

#business #technology