China's storage technology breakthrough combined with AI valuation concerns sends Samsung and SK Hynix shares plunging over 7% at open in South Korean market.

October 13 — The selloff in South Korean semiconductor stocks further widened. As of 11:20 AM Beijing time, Samsung Electronics fell 7.29%, SK Hynix dropped 8.35%, and the KOSPI index declined 6.05% to 5,997.99 points. The Korea Exchange briefly activated the sell-side "Sidecar" mechanism in early trading, suspending program trading of KOSPI constituent stocks for 5 minutes, signaling a marked escalation in market selling pressure.

Market concerns stem first from China's rising competitiveness. ChangXin Memory Technologies recently disclosed that it has achieved key progress on a memory chip architecture that Samsung Electronics and SK Hynix are also pursuing. Although the technological breakthrough remains far from forming large-scale, commercialized competitive capacity, capital has begun reassessing the impact of Chinese memory makers' catch-up on the future pricing power and valuation premium of South Korea's two leading players.

Marginal changes in the AI investment thesis have also amplified the decline. Broadcom CEO Hock Tan stated that demand for computing infrastructure still exceeds the industry's current supply capacity, and the supply-demand gap could persist until 2029 or even 2030; as hardware bottlenecks in chips, memory, and power gradually ease, capital access capability may become the biggest constraint on AI expansion. Many AI investors do not clearly understand the business models they are betting on, yet set extreme expectations, ultimately making this round of investment "almost like being in a casino."

Ha SeokKeun, Chief Investment Officer at Eugene Asset Management, said investors are worried about whether this semiconductor upcycle can extend into 2028 and beyond, and such uncertainty will continue to weigh on South Korean chip stock valuations.

After Samsung announced record earnings last week, its stock price still failed to receive a notable boost, indicating that market focus has shifted to growth sustainability. The South Korean stock market's previous strong rally was highly dependent on Samsung and SK Hynix, and it is now bearing more concentrated correction pressure as a result. The KOSPI has fallen about one-third from its June high and has broken below its 200-day moving average; since October, foreign investors have net sold more than $6 billion in South Korean stocks.