Samsung and SK Hynix Tumble as Chip Fears Trip KOSPI Sidecars

Shares of Samsung Electronics and SK Hynix fell by roughly 8 to 10 percent in early trading on July 28, a drop steep enough to trigger sell-side sidecars on both the main Kospi board and the smaller Kosdaq market as programmed sell orders piled up. The plunge in South Korea’s two largest chipmakers capped a volatile stretch for memory stocks and pulled the broader index lower, even as the companies had just been named partners in a large-scale technology tie-up with U.S. firms.

A Week of Whipsaw Trading

The July 28 decline did not come out of nowhere. Four sessions earlier, on July 24, both stocks had already fallen 7 to 8 percent, with foreign investors and domestic institutions selling in tandem. The two names then clawed back ground on July 27, when Samsung closed up about 1.8 percent and SK Hynix rose roughly 3.2 percent after an up-and-down session. That recovery proved short-lived. By the open on July 28, the rebound had unwound, and the pace of decline was fast enough that the exchange’s circuit-breaker mechanism for program trading kicked in on both markets.

The sidecar is an automatic, temporary halt on program sell orders imposed when a benchmark futures contract swings sharply, designed to slow a cascade of computer-driven selling. Its back-to-back activation on the Kospi and Kosdaq underscored how much of the day’s move was concentrated in the heavyweight semiconductor sector, where Samsung and SK Hynix together carry an outsized weight in the index.

Why the Selling Accelerated

Market participants tied the renewed weakness to competitive pressure from China’s memory industry, and specifically to volatility around ChangXin Memory Technologies, or CXMT, a mainland Chinese producer whose expansion has raised questions about future supply and pricing in the memory market. The concern is not new, but it resurfaced forcefully enough to overwhelm what would otherwise have been a supportive piece of news.

That supportive news was a planned partnership pairing major Korean companies, Samsung and SK Hynix among them, with U.S. Big Tech on artificial-intelligence infrastructure. Ordinarily an AI-linked cooperation agreement of that scale would lift chip names, given that memory is a core input for AI servers. Instead the Kospi stayed weak, a sign that near-term worries about Chinese competition and the direction of memory prices outweighed the longer-dated promise of AI demand.

The Two Companies Under Pressure

SK Hynix, founded in 1983 as Hyundai Electronics by Hyundai Group founder Chung Ju-yung and absorbed into the SK Group in 2012, is one of the three producers, alongside Samsung Electronics and Micron, that dominate global memory-chip output. It reported sales of 66.19 trillion won for the 2024 fiscal year and employed 46,863 people as of that year, a scale that makes its share price a bellwether for the health of the memory cycle.

Samsung Electronics, the flagship of a group founded in 1938, overtook Intel by 2017 revenue to become the world’s largest semiconductor manufacturer. Because both firms sit near the top of the Kospi by market value, a double-digit intraday swing in either ripples quickly through South Korean equity portfolios and index funds.

The Read for Investors

The immediate takeaway is that memory stocks remain highly sensitive to headlines about Chinese supply, and that sensitivity can, for a session, drown out favorable demand-side developments such as an AI partnership with U.S. technology firms. Whether the July 28 drop marks a durable repricing or another swing in an already choppy month will depend on how the market gauges the actual pace of CXMT’s capacity growth and its effect on memory prices in the quarters ahead.