On July 13 Beijing time, SK Hynix (000660.KRX), South Korea’s memory chip giant, faced an epic sell-off in the Seoul market. Shares closed at 1,845,000 KRW, plunging 15.37% in a single day. The Korea Composite Stock Price Index (KOSPI) dropped more than 8% intraday, triggering its seventh circuit breaker of the year and halting trading for 20 minutes. Samsung Electronics also fell over 9% that day, sliding more than 30% from its June 19 peak.
The drama of this crash lies in its timing—just three trading days earlier, on July 10, SK Hynix completed a historic IPO on Nasdaq, raising $26.5 billion and breaking Alibaba’s decade-long record for the largest US listing by a foreign company. Shares jumped 12.76% on the first day, with market cap reaching $1.22 trillion.
From Wall Street darling to Seoul’s hot potato, the market’s mood reversed sharply in just three trading days and across one weekend. Why did sentiment swing so violently? Is the AI memory supercycle just a mid-cycle correction, or is it the end of the trend?
$26.5 Billion IPO: A Classic "Sell the News" Playbook
To understand the July 13 crash, we first need to revisit the nature of the IPO itself.
SK Hynix issued 177.9 million American Depositary Shares (ADS) at $149 each, raising $26.5 billion. This not only surpassed Alibaba’s $25 billion US IPO record from 2014, but also ranked second only to SpaceX’s $75 billion fundraising in global equity issuance history. The IPO was oversubscribed by more than seven times, with total orders approaching $200 billion.
However, the IPO pricing itself carried structural risk of "good news priced in ahead."
Before listing in the US, SK Hynix’s Seoul shares had already surged over 200% since early 2026. On June 25, the company’s market cap briefly overtook Samsung Electronics, topping the Korean stock market. Over the past year, its share price soared more than 1,000%. The market had fully—and perhaps excessively—priced in AI chip demand, HBM growth, Nvidia supply chain value, and other bullish factors.
When the $26.5 billion IPO finally landed, Wall Street’s "record-breaking" headlines fulfilled the market’s last expectation. The classic market adage proved true once again: "Buy the rumor, sell the news." The IPO’s success provided the perfect excuse for early profit-takers to exit gracefully.
Brokerage Downgrades: How "Missed Earnings" Triggered the Sell-Off
If the IPO was the emotional trigger, then the Q2 earnings forecast report released by Korea Investment Securities (KIS) that morning provided a concrete fundamental anchor for the sell-off.
KIS projected SK Hynix’s consolidated revenue for Q2 2026 would reach 80.9 trillion KRW, up 54% quarter-on-quarter and 264% year-on-year; operating profit was expected at 60.4 trillion KRW, up 61% QoQ and a staggering 556% YoY.
On absolute numbers alone, this was an impressive report card. But the market focused on another figure: the 60.4 trillion KRW operating profit was about 8% lower than the consensus estimate of 65 trillion KRW.
KIS analyst Chae Min-sook offered two layers of explanation in the report:
Short-term technicals: SK Hynix’s HBM shipments account for a higher proportion than competitors, but HBM product prices are locked in via long-term supply agreements (LTA), leading to a lower increase in average selling price (ASP) compared to the overall DRAM market. KIS estimates Q2 ASP for DRAM and NAND rose about 30% and 50% QoQ, respectively.
Structural logic: The downward revision of operating profit forecasts for this year and next—by about 9% and 11%—isn’t due to deteriorating fundamentals, but because the memory industry is shifting from spot pricing to 3-5 year LTA contracts, compressing quarterly ASP flexibility and requiring adjustments to the earnings model.
In other words, it’s not that performance worsened, but the "pace" of earnings changed. Yet in a market dominated by negative sentiment, investors often choose to sell first and ask questions later.
Valuation Reset: AI Semiconductors Shift from "Explosive Growth" to "Mature Growth" Pricing
SK Hynix’s plunge is not an isolated event. It reflects a systemic valuation reset underway across the global AI semiconductor sector.
Since early July, the global AI supply chain has experienced intense turbulence. Morgan Stanley warned in its July 11 report that the Philadelphia Semiconductor Index’s P/E ratio has tripled since 2022, signaling "clear overbought" conditions. Hyperscale cloud providers are accelerating in-house development of low-cost chips, eroding chipmakers’ pricing power. Growth in AI capital expenditures may be entering an initial slowdown phase.
Chip stock valuations are shifting from "explosive growth" pricing to "mature growth" pricing—a transition often accompanied by sharp capital rotation and price volatility.
At the stock level, selling pressure is concentrated on high P/E names. Nvidia, despite posting FY2026 revenue of $215.9 billion, up 65% YoY, has seen its valuation drop to multi-year lows. AMD, Broadcom, Micron, and other AI chip stocks have all experienced varying degrees of pullback in recent weeks.
SK Hynix’s situation is especially unique. As both a core beneficiary in the AI chip supply chain and the most affected by this valuation reset—thanks to its outsized gains and thick profit-taking pressure—the correction has been particularly intense.
HBM Fundamentals Remain Solid: Why the Long-Term Thesis Still Holds
Despite near-term share price pressure, the core logic supporting SK Hynix’s long-term value remains fundamentally intact.
HBM is the "high-speed conveyor belt" for AI computing power. As AI model parameters scale from hundreds of billions to trillions, GPU performance is increasing much faster than data transfer speeds. HBM leverages 3D stacking and through-silicon via (TSV) technology for high-speed interconnects between chips, making it essential infrastructure for Nvidia’s H100, B200, and next-generation Rubin platform AI accelerators.
The market is still expanding rapidly. Goldman Sachs projects the global HBM market will reach about $56 billion in 2026, double to $116 billion in 2027, and further expand to $168 billion in 2028.
SK Hynix’s market position is unshakable. According to Counterpoint Research, SK Hynix held 58% of global HBM revenue in Q1 2026, with Samsung and Micron each holding 21%. SK Hynix has secured over two-thirds of Nvidia’s HBM4 supply orders.
Supply-demand dynamics remain tight. SK Hynix’s entire 2026 HBM and memory chip production capacity has already been fully booked by customers. SK Group Chairman Chey Tae-won stated that memory supply will never catch up with demand until AGI is achieved. The Bank of Korea also spoke out on July 13, refuting investor concerns about a peak in the chip cycle and emphasizing that the global semiconductor market remains undersupplied.
More importantly, the business model is undergoing a fundamental transformation. The memory industry is shifting from traditional cyclical spot pricing to 3-5 year long-term supply agreements. SK Hynix went further, removing price caps from LTAs, allowing spot price increases to be fully reflected in contract pricing during shortages. KIS analysts noted that as contract revenue grows and HBM expansion leads to supply shortages, "high profitability will be sustained long-term, and valuations will be reset to reflect earnings sustainability rather than absolute profit size."
Three Key Variables to Watch Going Forward
HBM market share and order visibility. Nvidia’s official HBM4 allocation ratios and SK Hynix’s LTA progress with major customers are critical indicators for income sustainability.
Memory chip price trends. Changes in DRAM and NAND ASP directly impact short-term profits. KIS expects ASP growth to return to market averages after HBM4 enters full-scale production in Q3.
Nasdaq ADR vs. Korean shares price gap. If ADRs remain at a premium, arbitrage capital may flow back; persistent discounts reflect international investors’ concerns about Korean market liquidity and governance.
Conclusion
SK Hynix’s July 13 plunge was the result of multiple factors converging: the "good news priced in" effect from a record-setting IPO, a wave of profit-taking triggered by broker downgrades to short-term earnings, and a systemic valuation reset as the entire AI semiconductor sector shifts from "explosive growth" to "mature growth" pricing.
But the crash itself does not equal a trend reversal. In the core HBM segment powering AI computing, SK Hynix still commands 58% market share, holds over two-thirds of Nvidia’s HBM4 orders, and has its entire production capacity sold out. The wild price swings reflect a pendulum shift in market sentiment from extreme optimism to excessive pessimism—but the fundamental anchor has not moved.
For investors, the real question isn’t "Has the AI chip cycle peaked?" but: After the market completes its shift from "explosive growth" to "mature growth" valuation, where is SK Hynix’s fair price range? The answer depends on the long-term slope of HBM demand, the impact of LTA models on earnings stability, and whether SK Hynix can maintain its technological moat ahead of Samsung and Micron’s chase.
FAQ
Q1: What was the direct cause of SK Hynix’s share price crash on July 13?
Korean brokerage KIS released its Q2 earnings forecast, projecting operating profit at 60.4 trillion KRW—about 8% below the consensus estimate of 65 trillion KRW—triggering concentrated profit-taking. Combined with the KOSPI circuit breaker and broad pressure on Asian tech stocks, SK Hynix’s closing loss widened to 15.37%.
Q2: Is the $26.5 billion IPO bullish or bearish?
The IPO itself is a major positive, setting a record for the largest US listing by a foreign company. But the market had already fully priced in AI chip demand and HBM growth before the IPO, so the successful listing became a "good news priced in" signal, triggering the classic "buy the rumor, sell the news" sell-off.
Q3: What is the long-term outlook for the HBM market?
Goldman Sachs forecasts the global HBM market will reach about $56 billion in 2026 and double to $116 billion in 2027. SK Hynix leads with a 58% market share. Its entire 2026 capacity is sold out. The tight supply-demand situation is unlikely to reverse in the short term.
Q4: What impact does the long-term supply agreement (LTA) model have on memory chips?
LTAs extend supply contracts from one year to three to five years, reducing quarterly earnings volatility. SK Hynix has also removed LTA price caps, allowing full benefit from spot price increases during shortages. This model is fundamentally changing the cyclical nature of the memory industry.
Q5: How close is SK Hynix’s supply chain relationship with Nvidia?
SK Hynix is Nvidia’s most important HBM supplier, securing over two-thirds of HBM4 orders. In June 2026, the two announced a multi-year technology partnership to jointly develop next-generation AI memory. Nvidia CEO Jensen Huang warned during his visit to Korea that memory supply shortages will persist for years.
