KEY POINTS
- SK Hynix's Korean shares crashed 15.4%, their worst day in nearly 20 years, and dragged Korea's whole market down 9%.
- Its new US shares (NASDAQ:SKHY) also fell, dropping about 8% from Friday's closing price of US$168.
- We see four reasons for the fall, and none of them is bad news from the company itself.
- Watch out: US buyers now pay about 25% more than Korean buyers for the very same shares.
Three days ago, SK Hynix (NASDAQ:SKHY) was celebrating. Its shares had just launched on the Nasdaq, jumping 13% on day one. Today, the party is over. Its Korean shares crashed 15.4%, their worst single day in almost 20 years. The fall was so severe that Korea’s stock market had to be halted.
Its new US shares fell too, dropping around 8% from Friday’s close of US$168. So what went wrong, and is the AI memory boom in trouble? Here is our take.
Four Reasons SK Hynix Fell
The first thing to know is that the company did not report any bad news. Nothing changed about the business. Four other things happened instead.
1. Investors cashed in. The shares had gone on a huge run this year. After a rally like that, plenty of people simply decided to take their profits.
2. The US listing changed the price tag. When SK Hynix sold shares to American investors at US$149, it gave the market a fresh opinion on what the company is worth. Korean investors looked at that new number and sold. The listing also created more shares, and more supply usually means a lower price.
3. A key product looks late. Analysts had expected SK Hynix to start shipping more of its newest memory chips, called HBM4, this quarter. That does not seem to be happening. One broker cut its profit forecasts as a result.
4. Bad timing. Fresh US-Iran tensions pushed oil prices up and spooked tech investors everywhere. Samsung fell 11%, and in the US, Micron dropped 6% and SanDisk 12%.
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The Trap for Australian Investors
Here is something almost nobody is telling you, and it matters if you plan to buy.
SK Hynix now trades in two places: Seoul and New York. After today’s fall, US shares cost about 25% more than Korean shares. Same company, same business, but a much bigger price tag.
Why? Because US investors are paying for easy access. That is normal; TSMC’s US shares cost about 13-14% more than its Taiwanese ones. But 25% is a lot, and analysts expect that gap to shrink over time. In simple terms, if you buy the US shares today, part of your money is buying convenience, not the business.
So Is the AI Memory Boom Over?
We do not think so, but it is being tested. SK Hynix is still a powerhouse. It makes roughly 60% of the special memory chips that Nvidia’s AI processors need. It beat profit forecasts by more than 40% last quarter. And even after this crash, the shares cost about 22 times earnings, which is far from bubble territory.
But two risks are real. If those new HBM4 chips keep slipping, the next results could disappoint. And memory chips are a boom-and-bust business: as recently as 2023, SK Hynix was losing money heavily.
What Should Investors Do?
Our view: this looks like a sharp price correction, not the end of the story. Nothing broke in the business overnight.
Even so, we would not rush in. You would be paying a hefty premium for the US shares; the next results now look shaky, and this stock has just proved it can drop 15% in a single day.
If you believe in AI memory for the long run, buy slowly and in small amounts rather than all at once. And watch the next earnings report closely; that is where the real answer lies.
