SK Hynix reported a sixfold surge in profits, but its shares still declined significantly, falling as much as -13%. This drop occurred amidst a broader sell-off in semiconductor stocks, influenced by renewed concerns regarding competition from Chinese chipmakers and the sustainability of AI investment spending. Other major chipmakers also experienced substantial declines, with Samsung Electronics falling around -12% and Kioxia Holdings down -18%, marking a ~60% decrease from its late June peak.
The global sentiment around chip stocks was further negatively impacted by reports that a Chinese company successfully began mass production of deep ultraviolet lithography machines, essential for advanced semiconductors. This news led to an -8.41% drop in ASML, a key chip-equipment manufacturer, and a -2.23% decline in the Philly Semi Stock Exchange Index. Even Nvidia saw its shares fall -4.99% despite working on AI deals valued over $750 billion, as investors worried about "circular AI financing."
The ripple effect of these concerns was evident across Asian markets, with the KOSPI index, home to many chipmakers, suffering a -10.11% decline, its steepest since early March. Circuit-breaker measures were triggered during the session due to the sharp drops. Despite the widespread tech sector downturn, broader equity markets showed some resilience, with nearly two-thirds of S&P 500 constituents posting gains and European indices like the DAX (+1.04%), CAC 40 (+0.40%), and FTSE 100 (+0.42%) also seeing decent increases, though the Stoxx 600 was dragged down by semi companies.
