SK Hynix Drops 11% as Chip Rout Spreads From US to Asia
Key Points
- SK Hynix tumbled 11% in Seoul trading, reversing an 8% rally from the previous session.
- Samsung Electronics fell more than 7%, while Japanese chipmakers Advantest and SoftBank Group each slid over 5%.
- US chipmakers Micron Technology sank 8% and Intel lost more than 4% overnight, triggering the regional sell-off.
Profit-Taking Amid Valuation Concerns
New York Governor Kathy Hochul ordered a temporary halt to new large-scale data center projects on Tuesday while the state develops stricter environmental standards. Yet analysts distinguished between near-term profit-taking and longer-term structural weakness. Bulk told CNBC that structural demand for AI infrastructure and memory chips remains intact, noting that high-bandwidth memory chip demand continues to outstrip supply as cloud providers build out AI systems, allowing leaders like SK Hynix and Micron to maintain pricing power.
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Louis Kondratev, trader at XFUNDs, characterized the recent pullback as a correction driven by crowded trades after a prolonged rally. He warned that semiconductors now comprise roughly 20% of the S&P 500, a concentration level that is "incredibly difficult to sustain." During the dot-com bubble of 2000, semiconductors represented just over 8% of the index and have historically averaged between 2% and 5%. "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," Kondratev said.
The sell-off occurred despite strong results from Dutch chip-equipment maker ASML, which raised its full-year sales guidance for a second time in 2025, forecasting revenue between 43 billion euros and 45 billion euros—above analyst expectations. ASML outlined plans to further ramp production of its extreme ultraviolet lithography machines.
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This pattern mirrors historical corrections in heavily concentrated sectors. During the 2000 technology downturn, semiconductor-heavy portfolios experienced similar sharp reversals after years of explosive growth fueled by a singular narrative.
The divergence between sentiment and fundamentals presents a direct trading decision for investors holding semiconductor positions or considering entry points. If you own SK Hynix, Samsung Electronics, or semiconductor-heavy exchange-traded funds, the current volatility reflects not deteriorating demand for AI chips—where shortages persist—but rather a valuation reset in a sector that has doubled investor concentration in recent years. The next few weeks will signal whether this represents a healthy correction or the beginning of a sustained rerating of semiconductor multiples.
Market Outlook
Analysts expect near-term volatility to persist as investors reassess semiconductor valuations, though structural demand for AI chips and memory remains strong. If profit-taking continues, further declines toward support levels are possible. However, supply-demand imbalances in high-bandwidth memory may limit downside if major cloud providers continue aggressive infrastructure buildouts.
Sources: AP, Reuters, ESPN, Bloomberg, BBC and other international news outlets.
Disclaimer: This article is for informational purposes only. Content is based on publicly available news sources.
Markets Desk
The NewsOracle Markets Desk covers stock markets, cryptocurrency, economic policy and breaking financial news from Wall Street and global exchanges.
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