Asian Memory Chip Stocks Tumble as AI-Driven Profit Boom Faces Supply Concerns
This week, a significant decline in Asian memory chip stocks reflects increasing skepticism among investors regarding the sustainability of the AI-driven profit surge in the sector, despite robust quarterly earnings fueled by rising prices. Investors appear to be balancing optimistic earnings forecasts with concerns over potential slowdowns in memory price growth as supply begins to meet demand. Samsung and SK Hynix experienced declines of 7.4 per cent and 10.1 per cent, respectively, with their shares dropping approximately 16 per cent and 22 per cent over the last five trading days. Together, these companies represent nearly half of South Korea's Kospi index, which ended 5.5 per cent lower after an intraday drop exceeding 7 per cent. In Shanghai, CXMT, the top DRAM producer in China, fell 2.8 per cent to 46.99 yuan (US$7.01), marking a total decline of around 14 per cent since before China's National Day holiday.
Key facts
- Samsung and SK Hynix closed down 7.4 per cent and 10.1 per cent, respectively.
- Samsung and SK Hynix have fallen about 16 per cent and 22 per cent, respectively, over the past five trading sessions.
- Together, Samsung and SK Hynix account for about half the weight of South Korea's benchmark Kospi index.
- The Kospi index closed 5.5 per cent lower after falling more than 7 per cent intraday.
- CXMT, China's leading dynamic random-access memory (DRAM) maker, closed down 2.8 per cent at 46.99 yuan (US$7.01).
- CXMT's drop since the close before China's National Day holiday is about 14 per cent.
- Investors are weighing strong earnings prospects against the risk of slower memory price growth as supply catches up with demand.
- The sell-off signals growing investor doubts over whether the sector's AI-driven profit boom can last, even as soaring prices drive strong quarterly earnings across the sector.
Entities
Institutions
- Samsung
- SK Hynix
- CXMT
- Kospi
Locations
- South Korea
- Shanghai
- China