SK Hynix and Samsung Sink Again as Korea Beats Its 2008 Volatility Record

Shares in SK Hynix, the South Korean memory chip maker, dropped more than 11% in Seoul on Thursday, wiping out the entire 8% rally the stock had logged just one session earlier. Samsung Electronics fell over 7% alongside it, and the selling spread to chip equipment makers in Japan within hours.

It’s the same whipsaw that has hit South Korea’s chip giants again and again since early June. The KOSPI, South Korea’s benchmark stock index, has now triggered seven circuit breakers in 2026, more than the exchange logged during the entire 2008 financial crisis, and the two chipmakers behind those swings still control close to half the index’s total value.

SK Hynix Erases an 8% Rally in Hours

Thursday’s reversal followed a script that’s played out repeatedly this summer. Asian semiconductor stocks tumbled as a sell-off in U.S. chipmakers spilled into the region, with SK Hynix continuing to see massive volatility since its U.S. listing the week before, according to CNBC. Seoul Semiconductor fell more than 5%, LG Innotek lost about 1%, and Samsung SDI slid over 2%.

In Japan, chip equipment makers Advantest fell more than 6%, SoftBank Group slid nearly 7%, Tokyo Electron lost over 5%, and Renesas Electronics declined 4%. The reversal wiped out gains from a broader Asia-Pacific chip stock rebound that had lifted the sector just days earlier.

Louis Kondratev, a trader at XFUNDs, told CNBC the pullback reflects how crowded semiconductor trades have become after a prolonged AI-driven rally. “Semiconductors alone now make up roughly 20% of the S&P 500, which is incredibly difficult to sustain,” he said, noting the sector made up just over 8% of the index during the 2000 dot-com bubble and has historically averaged between 2% and 5%.

Rolf Bulk, head of semiconductor and infrastructure equity research at Futurum Group, said the decline was largely a follow-on to the U.S. session overnight. He flagged a proposed moratorium on data-center construction in New York, where Governor Kathy Hochul ordered a temporary halt to new large-scale projects, and reports that CoreWeave was exploring hedges against future memory-price declines. Still, Bulk said the weakness reflected profit-taking rather than any deterioration in fundamentals, since demand for high-bandwidth memory (HBM) chips continues to outstrip supply.

Seven Circuit Breakers Beat the 2008 Playbook

Samsung and SK Hynix led the rout on July 13, tumbling 10.70% and 15.37% respectively and triggering a sell-side sidecar and the year’s seventh circuit breaker in a single session. The Kospi closed at 6,806.93 that day, down 8.95% from the previous session. Advisor Perspectives, citing exchange data, reported the local bourse has activated 13 circuit-breaker suspensions on the Kospi since 2000, seven of them this year alone.

That pace has already overtaken the last comparable crisis. By late June, the exchange had logged close to 30 sidecar activations and five circuit breakers for the year, beating the KOSPI’s prior annual sidecar record of 26 halts set during the 2008 financial crisis. By July 13, the tally had climbed to 35 sidecars and seven circuit breakers.

Hebe Chen, a market analyst at Vantage Global Prime, described the mood after the July 13 rout in blunt terms.

SK Hynix is trading through the hangover after the dopamine rush, as the excitement that powered the rally gives way to a much harsher reset in expectations.

Chen added that a 30% pullback from a peak “does not automatically create a floor when leverage, index concentration and crowded positioning can still turn every retreat into another wave of forced selling.” Both SK Hynix and Samsung were down at least 30% from last month’s highs by the time she spoke, with SK Hynix’s market cap sliding to $875 billion less than two months after it joined the trillion-dollar club.

Two Stocks, Half a Market

The reason a single stumble can trip a market-wide circuit breaker comes down to arithmetic. In early June, Samsung and SK Hynix together made up about 40% of the KOSPI. By July 2, Zavier Wong, a market analyst at eToro, put the figure at around half, “up from around just a quarter at the end of last year.” “A sharp move in either name drags the whole index with it before the other roughly nine hundred listed companies get a say,” he said.

By July 13, BigGo Finance reported semiconductors accounted for nearly 60% of the KOSPI’s total market capitalization, with supply-demand distortions in leveraged products amplifying every move. The rise from a quarter to nearly 60% inside seven months means the same rally that made Korea’s market the world’s best performer also built its fragility in from the start.

Leverage Turns a Dip Into a 66% Wipeout

The concentration problem compounds once leverage enters the picture. Single-stock leveraged ETFs tracking Samsung and SK Hynix must rebalance constantly, buying more as prices climb and selling more as they fall to hold a fixed leverage ratio. That mechanical selling turns an ordinary pullback into a cascade.

• KODEX SK Hynix Leverage fell 66.6% from its intraday high during the July 13 rout, a record low since its listing
• TIGER Samsung Electronics Leverage dropped 60.4% over the same session
• The largest leveraged funds tracking SK Hynix have lost nearly half their value since listing in Seoul in late May
• In the U.S., the Roundhill Memory ETF has fallen roughly 25% from its June 22 peak, and the VanEck Semiconductor ETF is down 12%

Foreign investors have largely been the ones pulling the trigger. On July 13 alone, foreign investors offloaded 1.7 trillion won, about $1.1 billion, worth of Kospi shares, with selling in SK Hynix accounting for most of it, according to exchange data compiled by Bloomberg. Institutions sold another 2.22 trillion won, roughly $1.5 billion. Retail investors stepped in as net buyers of 3.88 trillion won, about $2.6 billion, absorbing much of the selling pressure, but it wasn’t enough to stop the slide.

Is the AI Chip Boom Slowing Down?

Not according to the people running it. AI company executives told CNBC they see no signs of overcapacity in the AI buildout, though enterprises are scrutinizing AI costs and returns more closely. Wall Street is split. JPMorgan and Morgan Stanley have both flagged risk, while South Korea’s central bank insists the memory supercycle isn’t over.

JPMorgan has warned the AI chip rally may be hard to sustain, outlining two paths: hyperscalers monetize their AI investments more effectively and demand keeps climbing, or the spending eventually forces a pullback that weakens chip orders. Morgan Stanley, a bank often nicknamed the “grim reaper of semiconductors,” told clients “the narrow, semiconductor-led rally is ending, and we are entering a phase where market leadership is broadening to other sectors.” The Bank of Korea, meanwhile, has sought to reassure markets that the AI-driven semiconductor supercycle is not over, even as concerns about oversupply intensify.

Consumer electronics offer one data point on real-world demand. a memory chip shortage that pushed up Galaxy A27 pricing earlier this year showed how tight DRAM supply had already become before AI demand strained it further. Trade data tells a similar story: South Korea’s June exports hit a record high even as the KOSPI sold off, and China’s own exports jumped 27% in June, powered by the same chip and AI demand driving Seoul’s rally in the first place.

Bitcoin’s Mixed Signal Through the Rout

Crypto has not behaved like a clean hedge against the chip selloff. During the earliest rout in early June, bitcoin tumbled below $60,000 for the first time since late 2024, falling in the same direction as chip stocks rather than against them.

By early July, the relationship looked different. Bitcoin, which had dipped below $58,000 on July 1, was back trading above $61,000 after Bloomberg reported Meta Platforms was creating a business unit called Meta Compute to resell excess GPU capacity, the news that triggered that week’s chip-stock rout. Weeks later, during the Strait of Hormuz-driven selloff, bitcoin again declined toward $62,000, tracking the broader risk-off mood in tech.

The signal, in other words, flips depending on which week gets checked. Bitcoin fell alongside chips in the earliest shock, then decoupled and climbed as the memory trade kept sliding in July, a pattern that looks more like opportunistic capital rotation than a consistent flight to safety.

Samsung’s Record Profit Wasn’t Enough

The July 7 sell-off was especially jarring because it came right after Samsung reported preliminary second-quarter results that beat forecasts, with operating profit surging 1,810% year-on-year to 89.4 trillion won. Excluding performance bonus provisions, the company effectively earned more than 106 trillion won, or roughly $70 billion.

SK Hynix was expected to report second-quarter operating profit of around 60 trillion won, about $39.6 billion, later that month. Combined, the two firms’ quarterly operating profit of roughly 150 trillion won, about $99.1 billion, would surpass their combined annual operating profit for all of 2017 and 2018, earned in just three months this time.

The market shrugged it off anyway. Kim Seok-hwan, an analyst at Mirae Asset Securities, said what mattered was the gap between the results and what traders had already priced in. “The level that market participants were expecting was far higher than expert forecasts, so even after delivering a surprise, the stock price fell,” he said.

Not everyone reads the setup the same way. Lee Kyung-min, an analyst at Daishin Securities, argued fundamentals were “actually showing visible improvement” despite the sharp decline, pointing to a KOSPI forward price-to-earnings ratio of 6.3 times at the intraday low, which he called “an extremely undervalued territory approaching the lows seen during the global financial crisis.” Nam Yong-soo, head of the ETF division at Korea Investment Trust Management, went further, advising a portfolio built 90% around AI-related assets and forecasting Samsung and SK Hynix “will continue to rise through next year.”

SK Hynix reports its full second-quarter results later this month, the next test of whether Seoul’s chip rally still has a floor.

Disclaimer: This article is for informational purposes only and does not constitute investment, financial, or trading advice. Stocks, ETFs, and cryptocurrencies are volatile assets that carry risk of loss. Consult a licensed financial advisor before making investment decisions. Figures are accurate as of the time of publication.