South Korea’s stock market rout has rapidly taken the shine off one of this year’s biggest AI success stories: Samsung Electronics and SK Hynix’s ascent into the trillion-dollar club.
Fueled by the global artificial intelligence boom, both memory-chip giants crossed the $1 trillion market-capitalization threshold in May as investors piled into companies expected to benefit from soaring demand for AI infrastructure.
But the rally has since sharply reversed, and both companies have fallen out of the club.
On Thursday, South Korea’s benchmark Kospi index was trading 1% lower around midday and is about 40% from its late-June peak.
Samsung Electronics’ stock was 1% higher after paring gains that followed stronger-than-expected second-quarter results. Samsung reported a 1,800% rise in operating profit to 89.5 trillion won, or about $62 billion, beating analysts’ expectations. The stock is 44% lower than its peak last month.
SK Hynix shares, meanwhile, was 6% lower and down about 55% from its June peak. The latest leg lower followed another record quarter from SK Hynix as operating profit surged 557% — but fell short of analysts’ expectations.
Samsung Electronics and SK Hynix are now worth about $923 billion and $704 billion, respectively, according to LSEG data.
The reversal is especially striking for SK Hynix.
Once largely regarded as a cyclical memory-chip maker, SK Hynix transformed itself into the leading supplier of high-bandwidth memory chips for AI accelerators, vaulting into the ranks of the world’s most valuable technology companies.
Earlier this month, it capped that ascent with a $26.5 billion Nasdaq ADR offering, the largest US share sale by a foreign company. The offering was priced at $149 an ADR, but the US-listed shares have since fallen below that level, highlighting how quickly enthusiasm for AI chip stocks has cooled.
The retreat has also exposed the risks posed by South Korea’s boom in single-stock leveraged exchange-traded funds, which have magnified the downturn as retail investors unwind leveraged positions, adding momentum to falling share prices.
South Korea has already suspended new listings of single-stock leveraged ETFs this month and on Wednesday pledged additional measures to stabilize the market, including limiting retail access to the products.
IG market analyst Fabien Yip said the measures should ultimately help restore more orderly trading.
“New government caps on retail leveraged ETF allocations may accelerate near-term selling, but should support a healthier, more rational market once deleveraging completes,” Yip said.
