South Korea's semiconductor heavyweights took a heavy hit on Wednesday as the selloff in US chip stocks crossed the Pacific, dragging the KOSPI index down sharply. SK Hynix fell as much as 9.63% in early trading, while Samsung Electronics dropped 7.64%, before paring some losses. By mid-morning local time, SK Hynix was down 8.36% and Samsung 7.08%.
The decline came after a brutal session on Wall Street, where Micron Technology sank 7% to $940.76, SanDisk lost 9%, and US-listed shares of SK Hynix fell 9.2%. The Philadelphia Semiconductor Index dropped 5% as rising Treasury yields and geopolitical tensions in the Middle East prompted investors to rotate out of technology stocks.
Why Micron's rout is hitting Seoul
The transmission from the US to South Korea was unusually direct. Micron had surged nearly 18% over the previous five sessions before Tuesday's reversal, but the rebound quickly unwound as investors trimmed exposure to chip names. Nvidia fell 2.3%, and other semiconductor and data-storage stocks followed suit.
Jordan Klein, a trading desk analyst at Mizuho Securities, attributed part of the US decline to machine-driven trading amid thin mid-August volumes. Memory shares have become high-momentum trades, where algorithmic selling and rapid shifts in positioning can amplify market moves.
Higher Treasury yields added another layer of pressure. The US 30-year yield reached its highest level since 2007 on Tuesday, as elevated oil prices revived inflation concerns. Jefferies analyst Jeffrey Favuzza told MarketWatch that high Treasury yields were among the factors weighing on semiconductor shares.
Korea's memory giants amplify the AI trade's swings
Samsung and SK Hynix have an outsized influence on South Korea's market, making any global semiconductor retreat particularly painful for the KOSPI. Macquarie analysis showed the two companies accounted for 71% of the KOSPI's losses during July's rout, with their combined decline of 48% far exceeding the 26% drop in the rest of the market.
That episode highlighted how positioning can magnify fundamental concerns. During the July selloff, KB Securities' Peter Kim told Reuters that the decline was "not driven by fundamental deterioration," but by liquidity, sentiment, and forced unwinding of leveraged single-stock ETFs. Société Générale's Frank Benzimra echoed that view, telling Reuters that Korean AI equities had become "a very crowded trade which is being unwound."
Memory demand still looks exceptionally strong
Despite the market turmoil, industry data have not turned bearish. TrendForce said on Tuesday that strong AI-server demand should continue supporting NAND flash growth in the third quarter. Data-center purchases kept the market undersupplied in the second quarter, while combined revenue for the five largest NAND suppliers jumped 77% sequentially to $68.87 billion.
Samsung remained the largest supplier by revenue, followed by SK Hynix and Micron. Macquarie has gone further, telling Business Insider that the industry faces the "worst memory crunch in history" and that supply constraints may not ease for three years. It described AI inference-driven memory demand as "off the charts."
For investors, the key question is whether this week's selloff is a temporary correction or the start of a deeper downturn. The recent drop in Micron and other chip stocks suggests that rising yields are a near-term headwind, but the underlying demand for memory remains robust. As some analysts have noted, memory stocks may still have room to run despite their massive gains.
The broader market is also watching the 30-year Treasury yield, which has climbed to multi-decade highs, pressuring growth stocks across sectors. If yields continue to rise, the pressure on high-valuation tech names could persist, but the memory cycle's fundamentals remain intact.
This article is for informational purposes only and does not constitute financial advice.
