SK Hynix plunges after Nasdaq debut

SK Hynix shares fell more than 15 percent in Seoul on Monday, its biggest one-day decline in nearly two decades. Investors cashed out of a scorching share price rally following its Nasdaq debut last week.

The company’s US-listed shares dropped 9.2 percent to $152.50 in premarket trading on Monday. This followed a jump of more than 12 percent during its Nasdaq debut on Friday. The declines in SK Hynix’s shares, alongside those of rival chipmaker Samsung Electronics, contributed to a 9 percent plunge in South Korea’s Kospi. The sharp drop triggered a 20-minute trading halt.

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Korean stocks extended losses after trading resumed. This came even as President Lee Jae Myung reiterated that the government would help speed up projects to build chip fabs in investments worth hundreds of billions of dollars.

The world’s leading AI memory chipmaker raised over $26 billion last week selling American Depositary Receipts priced at $149 each. This capital raise followed its Korean shares more than tripling this year.

The ADRs opened 14 percent above the offer price at $170. The shares ended their first trading day with a 12.8 percent gain.

The current memory upcycle is tracking substantially stronger than expected, said Lorraine Tan, a director at Morningstar. Tan values the company at $160 per ADR.

Tan added that their base case continues to assume normalisation in cycle dynamics. This limits upside at current levels. Despite accelerating artificial intelligence adoption, monetisation remains uncertain, she noted. Profitability for key players, such as OpenAI, appears to be under pressure.

Funding is also shifting toward debt or equity, she said. This dynamic raises concerns about the maintainability of current spending levels.

Analysts said the large-scale investments in Korea heightened uncertainty over the supply outlook. The expansion fuelled concerns that the tight supply could give way to an oversupply cycle.

Our base case here is the fresh capacity in 2027 and 2028 coming up in earnest will improve supply dynamics, said Jing Jie Yu, an equity analyst at Morningstar. Yu noted this could lead to price erosion.

SK Hynix Chief Executive Kwak Noh-jung dismissed concerns about aggressive capacity expansion. Kwak stated the memory industry is heading for its most severe supply shortage in 2027. He forecasted that demand will continue to exceed the company’s ability to produce memory chips well into the next decade. Volatility in SK Hynix shares has surged this year.

The firm became a target of global investors betting on a sustained boost to profits from a shortage of high-bandwidth memory chips used in AI data centres. Many used leveraged exchange-traded funds.

In Hong Kong, a single-stock ETF tracking SK Hynix offered by fund manager CSOP lost more than a third of its value on Monday. This marked its biggest one-day decline since listing in October.

The fund uses leverage to target twice the daily returns of its shares. After the rout in the Seoul market, SK Hynix’s US ADRs were left trading at a premium.

The ADRs, which represent one-tenth of a share and closed at $168 on Friday, traded at a 37 percent premium to its South Korean share price. Arbitrage remains limited by hurdles.

Companies with both US and home-market listings often trade at a premium in the US, said James Ooi, a market strategist at Tiger Brokers in Singapore. They benefit from broader investor access.

Ooi added that deeper liquidity and stronger valuation support also play a role. Arbitrage is limited by hurdles in converting Korean shares to ADRs, he added.

Investors were profit-taking after the conclusion of the US listing, said Ryu Young-ho, a senior analyst at NH Investment & Securities. Sentiment also suffered from caution regarding second-quarter earnings.

He said investors had expected shipments of SK Hynix’s HBM4 chips to increase from the second quarter. However, the increase does not appear to have materialised at scale.

Ryu also said investors had moderated earnings expectations due to its greater exposure to the HBM market than cross-town rival Samsung. The firm was set to benefit less from rising conventional DRAM prices.

SK Hynix led the market for high-bandwidth memory chips with a 58 percent revenue share in the first quarter. Samsung and US competitor Micron Technology each held 21 percent.

The market share figures were provided by Counterpoint Research data. HBM chips are primarily used in artificial intelligence systems for customers such as Nvidia and Alphabet’s Google.