Samsung Electronics and SK Hynix shares suffered sharp declines on Tuesday as Oracle's plan to raise $20 billion through equity and debt sales reignited concerns about the sustainability of the artificial intelligence spending boom. In early Seoul trading, Samsung fell 4.59% to 218,500 won, while SK Hynix dropped 5.10% to 1,397,000 won. The broader KOSPI index slid 3.36% to 5,662.37, reversing the previous session's gains for both chipmakers.
The sell-off followed an 8.8% drop in Oracle's stock on Wall Street, where Micron Technology also lost 5.8%. Oracle's fundraising, announced Monday, involves $10 billion in new shares and $10 billion in bonds to support cloud infrastructure expansion. While the proceeds are earmarked for construction, debt repayment, and general corporate purposes—not reflecting lost orders—investors interpreted the move as a sign that even major AI infrastructure providers need external capital to sustain growth.
AI financing worries overshadow record profits
This development is particularly relevant for Samsung and SK Hynix because advanced memory chips are critical components in the processors that power AI data centers. If customers face higher borrowing costs or pressure to conserve cash, future purchasing decisions could become more selective. BNK Securities analyst Lee Min-hee warned that growth in Big Tech's AI infrastructure investment could peak in the third quarter, with deteriorating free cash flow and financing challenges persisting.
Despite these concerns, both companies reported record quarterly results. Samsung posted third-quarter revenue of 195.3 trillion won and operating profit of 107.4 trillion won, with its semiconductor division contributing 106.5 trillion won in profit, reflecting strong pricing and demand for AI-related products. SK Hynix delivered revenue of 104.6 trillion won and operating profit of 83.3 trillion won, driven by its high-bandwidth memory (HBM) products, which are stacked alongside advanced AI processors to enable rapid data movement.
Long-term demand signals remain strong
Samsung expects AI-related memory requirements to outstrip supply by 2027, while SK Hynix has secured long-term agreements covering more than half of its planned 2027-28 production capacity. SK Hynix also reported expanding HBM4 sales and server-memory shipments, reinforcing the strength of current demand. These factors provide a counterargument to the bearish sentiment, with Samsung Securities researcher Seo Jeong-hoon telling Chosunbiz that funding capacity and demand among large technology companies remained resilient despite rising AI investment costs.
The recent sell-off reflects uncertainty about future returns rather than evidence of an immediate collapse in semiconductor orders. Korea Investment & Securities cut its Samsung price target to 440,000 won from 570,000 won on Tuesday but retained a buy rating. Analyst Ko Young-min expects memory prices to remain supportive, though further gains may depend on Samsung improving its HBM and foundry businesses.
Investors will closely monitor upcoming US technology spending forecasts, Korean foreign-investor flows, and whether chipmakers can sustain their extraordinary margins. SK Hynix's long-term supply contracts and shareholder-return plans offer some protection against shifting sentiment. Kiwoom Securities analyst Han Ji-young noted that AI shares had already undergone a substantial correction, suggesting a period of sideways trading could be more plausible than another steep decline.
This article is for informational purposes only and does not constitute financial advice.
