SK Hynix shares plunge to lowest level since April amid wider AI market sell-off

Shares of SK Hynix fell 4.23 percent in trade on Tuesday, October 20, reaching their lowest level since April. The drop extended a seven-session slide that has erased 31 percent of the stock's value. The decline also pulled the Kospi Index down 4 percent due to the company's large weight in the index.

Market Impact

MSCI Inc.'s Asia Pacific Index dropped 1.2 percent, moving away from Monday's gains on Wall Street. Data center firm Elice Inc. dropped 33 percent during its trading debut in Seoul. SoftBank Group Corp.'s credit risk rose to its highest level in nearly four years over concerns about AI funding and a potential large acquisition.

Pressures On Chip Stocks

Chip stocks have faced pressure from rising Chinese competition, tight NAND supply, higher interest rate expectations, and doubts about AI spending. The sell-off sped up after Chinese firm ChangXin Memory Technologies made progress in a new memory-cell design. Company president Cao Kanyu stated that the firm plans to release a new server-memory product by the end of 2026. Despite recent drops, SK Hynix stock is still up 93 percent overall, and Nvidia Corp. CEO Jensen Huang urged investors to look at long-term value.

Context

Financial markets often react sharply to new technologies when spending is high and future profits are uncertain. Semiconductor stocks are cyclical, meaning their prices move up and down based on global supply, demand, and manufacturing technology shifts.