SK Hynix Shares Plunge 45% From High as AI Chip Sell-Off Deepens

A sell-off in the semiconductor sector deepened significantly as signs of progress in China’s advanced chipmaking compounded broader worries about the sustainability of the artificial intelligence spending boom. The market turbulence pushed South Korea’s Kospi index down 10 per cent and left Japan’s Nikkei down 4 per cent in a regional retreat that mirrored heavy losses across U.S. technology shares.

SK Hynix Loses US$570 Billion in Market Value Amid AI Fatigue

For South Korean memory chipmaker SK Hynix, a US$570 billion rout in just a little over a month has flipped the firm from one of the world’s hottest artificial intelligence trades into a major portfolio question mark. Shares of the company have plunged 45 per cent from their all-time high set in June, driven by overcrowding and a surge in leverage-induced volatility.

Despite the dramatic pullback, SK Hynix is expected to post record earnings for the June quarter on Wednesday, July 29, 2026. Analysts project that sales more than tripled compared with a year ago to around US$57 billion, accompanied by a sixfold increase in operating profit. However, investors have turned skittish over fears that rising memory costs will force customers to reduce usage and seek cheaper alternatives.

“The debate now is whether memory is taking too much of the pie.”

Andy Wong, head of multi-asset at Pictet Asset Management HK

Wong’s fund has actively reduced its position in SK Hynix in recent weeks, according to market reporting from Singapore. Meanwhile, U.S.-listed American depositary receipts for SK Hynix dropped below their July 9 offering price, and rival Samsung Electronics saw its shares slide more than 6 per cent following its preliminary profit report on July 7.

Hyperscaler Cash Burn and Nvidia Data Center Backstop Concerns

The chip market correction snowballed amid growing concerns regarding circular financing and the immense debt loads being incurred by major technology firms. Investors are increasingly unnerved by the heavy capital expenditure of hyperscalers building out AI infrastructure, with Big Tech borrowing this year running at nearly twice the pace of last year.

Sentiment took another hit following reports that Nvidia could provide a roughly $250 billion backstop for a massive OpenAI data-center project. The potential agreement sparked concern across Wall Street regarding the extent to which hardware giant Nvidia is investing directly in its own customers.

“Those companies embody the critical theme weighing on sentiment in the markets right now.”

Kyle Rodda, senior financial market analyst at Capital.com

Rodda noted that investors worry excessive spending by Microsoft, Meta, Apple, and Amazon will eat into returns as earnings reports loom.

Chinese Competition and CXMT’s Explosive Market Debut

Adding to pressure on Western and Asian chipmakers, competitive threats from China intensified. Chinese memory-chip maker CXMT executed a stratospheric stock-market debut with a first-day jump of nearly 470 per cent, establishing a new industry giant ready to absorb substantial investment capital. Apple has reportedly sought to utilize CXMT products, heightening competitive pressure on U.S. firms.

Concurrently, reports that Chinese enterprises are developing advanced chipmaking technology capable of competing with ASML’s dominant equipment sent European tech shares tumbling. These developments stoked fears that Western companies could lose their tight grip on crucial segments of the global semiconductor supply chain.

Valuations, De-Grossing, and Upcoming Tech Earnings

Despite the steep market sell-off, some analysts view the pullback as an opportunity. Shawn Oh, head of Korea cash equities at NH Investment & Securities, noted that SK Hynix shares represent a compelling buy given attractive valuations and ongoing deleveraging among Korean retail investors. SK Hynix shares currently trade at less than four times forward earnings estimates, sitting below rival Micron Technology’s multiple of 6.2 times.

Even so, short-term positioning remains defensive. Market participants are actively de-grossing their portfolios ahead of the broader U.S. tech earnings season. As market strategist James Ooi at Tiger Brokers observed, expectations are priced to perfection, meaning even a modest miss could prompt a sharp reaction as global sentiment tests the durability of the AI hardware boom.