Asian memory chip stocks sell off on Tuesday despite strong AI-driven earnings

Mixed · 2Shares in Samsung Electronics and SK Hynix fell sharply in Seoul on Tuesday 13 October, with Samsung down 7.4% and SK Hynix down about 10%. 1 2 Mixed · 2South Korea's Kospi index fell heavily; the Guardian reported a 6.25% drop, while the South China Morning Post said it closed 5.5% lower after falling more than 7% intraday. 1 2 Left · 1Other Asian markets were also lower: Japan's Nikkei fell 1.8%, the Taiwan exchange lost almost 2% with TSMC down by a similar amount, Tokyo Electron fell 7.15% and SoftBank Group lost 8.5%. 1

Centre · 1The SCMP said Samsung and SK Hynix had fallen about 16% and 22% over five sessions, and that together they make up about half the weight of the Kospi. 2 Centre · 1In Shanghai, CXMT, China's leading DRAM maker, closed down 2.8% at 46.99 yuan, about 14% below its close before China's National Day holiday and about 20% below its 23 September close. Its shares had risen as much as 614% above the July offer price to a record 61.80 yuan in mid-August. 2 Left · 1The Guardian linked the sell-off to two things: remarks by Broadcom chief executive Hock Tan, who told a Singapore conference that many AI investors "have no clue what they are investing in" and are "almost like they are in a casino", and CXMT's reported progress on a new DRAM architecture. 1

Centre · 1CXMT said it aims to launch a DDR5 server-memory product by the end of the year using a 4F square cell architecture, which could fit more memory on a chip. Kiwoom Securities strategist Han Ji-young cautioned that it is not yet in mass production and its yields, performance and customer qualification are unverified. 2 Centre · 1CXMT's share of global DRAM revenue reached 10% in the second quarter, up from 4% a year earlier, according to Counterpoint Research. SemiAnalysis estimates its cost per DDR5 bit remains more than 30% higher than its three largest rivals'. 2 Centre · 1The SCMP described the sell-off as a sign of investor doubt about whether the AI-driven profit boom can last, even as soaring prices lift earnings. Morgan Stanley's Shawn Kim wrote "We think the easy money is past", and Kiwoom said foreign investors were cutting holdings after a strong run. 2

Centre · 1Samsung had forecast quarterly operating profit of 107.4 trillion won, broadly in line with expectations. TrendForce expects conventional DRAM contract prices to rise a further 10–15% this quarter, and Morgan Stanley expects memory prices to stay firm through 2027. Samsung's full results on 29 October are the next test. 2 Mixed · 2In the US, Micron fell 3.9% on Monday, with Sandisk down 6%, and both were lower in Tuesday premarket trading. IG analyst Chris Beauchamp said the rout "seems set to continue thanks once again to news from China". The Guardian also noted AI shares have swung on concerns about debt-funded infrastructure spending, and that OpenAI is still loss-making. 2 1