Seoul's Kospi ended 6% lower on Wednesday after record quarterly profit at SK Hynix missed analyst forecasts, taking the index's losses this week to 15%. The selling also hit Tokyo, where the Nikkei 225 closed 1.5% down, as investors questioned how long the AI spending boom will hold.
Seoul's Kospi index dropped as much as 13% before ending down 6% on Wednesday, bringing its losses this week to 15%. Investors dumped chipmaker stocks after disappointing results from SK Hynix, sending Asian markets lower amid fears about the AI boom's sustainability.
SK Hynix set a profit record and still missed
The world's second-largest memory-chip maker reported a 557% surge in operating profit to a record Won60.5tn ($42 billion) in the three months to 30 June, compared with the same period last year. But that fell short of LSEG SmartEstimate's forecast of Won64tn. Sales also missed estimates, despite jumping 257% to Won79.3tn ($55 billion).
Shares in SK Hynix plunged almost 20% before paring losses to close about 10% lower. Samsung Electronics, SK's larger rival, weakened 5.2%.
China's lithography push adds to the anxiety
According to Song Zhe at BNP Paribas Asset Management: "The semiconductor market has run too fast too far." Song said investors were further rattled by a Reuters report on Tuesday suggesting China would begin mass-producing its own deep ultraviolet (DUV) lithography machines needed for advanced chipmaking.
Kim Young-geon, an analyst at Mirae Asset Securities in Seoul, cut SK Hynix's target price and said investors were now concerned about China making lithography equipment.
Some selling was taking place ahead of market restrictions coming into effect on the Kospi on Friday, investors said. South Korean regulators have set a minimum cash requirement to invest in single-stock leveraged exchange traded funds, which they have blamed for much of the volatility.
The rout reached Tokyo and Europe
Tokyo's Nikkei 225 ended 1.5% lower, taking its decline since its June peak to more than 15%. AI and semiconductor stocks dropped once again, with component maker Murata Manufacturing, memory-chip maker Kioxia and semiconductor groups Tokyo Electron and Lasertec suffering steep falls.
In Europe, ASML fell 1.2% before turning positive. Futures tracking the Nasdaq 100 were flat on Wednesday after sharp losses for US semiconductor stocks on Tuesday.
Analysts at Eurasia Group said Korea's stock market has been nearly twice as volatile as Japan's this year, blaming the historic rally in Korean stocks, its reliance on a few companies such as SK Hynix and Samsung, and the impact of leveraged ETFs. They noted that the Kospi had even surpassed bitcoin in terms of volatility this year.
SK Hynix stock has now shed more than half its value since its June peak amid growing doubts over the durability of AI spending by America's biggest tech companies. Executives said the risk of memory oversupply from capacity expansion remained limited, arguing supply would stay tight for a considerable period as customers continued to buy more chips.
Source: Financial Times
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