SK hynix shares slump more than 15% as concerns mount around massive AI investments
Seoul, July 13
,: Shares of Korean memory-chip maker SK Hynix slumped more than 15 per cent on Monday after the company's American Depository Receipts made a blockbuster debut on Nasdaq last week on Friday.
The steep fall in the share price of the chip giant comes at a time of increased volatility in AI-related shares, with investors trying to gauge the sustainability of the huge AI investments and their ability to generate profits.
SK Hynix raised more than USD 26 billion by issuing ADRs to widen the investor pool for the company and issuing fresh shares. The ADRs were priced at USD 149 and opened with a 14 per cent gain at USD 170. The ADRs closed at USD 168 apiece, up nearly 13 per cent from the offer price.
The slide in the shares of SK Hynix along with its Korean rival Samsung, whose shares also fell more than 10 per cent on Monday, led to the Korean index KOSPI ending the day's session nearly 9 per cent down. The two semiconductor heavyweights dominate the index with a combined weight of more than 50 per cent.
Semiconductor stocks, especially memory chipmakers like SK Hynix, Samsung and their American rival Micron, have been on a tear this year with their shares in high demand among investors. The spectacular AI rally led to the three companies entering the USD 1 trillion valuation club this year.
However, the recent memory chip crunch has led to their prices rising, leading to consumer tech firms like Apple raising the prices of some of its offerings, like iPads and MacBooks.
Investors have expressed concerns around the huge AI investments that have run into hundreds of billions of dollars as hyperscalers like Amazon, Alphabet, Microsoft and others ramp up their compute capacities.
SK Hynix, which has benefited from the AI boom as the market leader in the high-bandwidth memory (HBM) chips, has pledged huge investments along with Samsung to increase the chip capacity in Korea. However, that may not serve as an immediate relief for the scarcity faced by the industry, with many concerned that this could hit margins.
— ANI
Reader Comments
Interesting to see KOSPI drop 9% just because Samsung and SK Hynix fell. This is why India's market diversification is important—we shouldn't put all our eggs in one basket, yaar. Also, AI investments running into hundreds of billions with no immediate profits? Sounds like the dot-com bubble all over again 😅
I work in IT, and the demand for AI computing is real—but these valuations are insane. SK Hynix raised $26 billion via ADRs, and now its stock tanks. Bro, that's a lot of retail investors getting burned. My suggestion: wait for the dust to settle. Memory chips are cyclical, and this HBM boom might not last forever.
As an investor, this volatility is concerning. The ADR debut was great—opening 14% up—but then the stock dropped 15% the next day. Classic case of profit-booking. But the bigger issue is whether hyperscalers like Microsoft and Google will keep spending billions on AI chips if they don't see returns soon. India should watch carefully before committing to similar mega-investments.
Logistics perspective: the memory chip crunch is real. Our company uses Samsung SSDs, and prices have gone up 20% in six months. That's hitting margins across industries, not just consumer electronics. SK Hynix and Samsung need to ramp up capacity fast, but that takes years. Meanwhile, Apple hikes iPad prices—consumers bear the brunt. Not a great situation.
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