Samsung, SK Hynix Shares Plunge as China Chip Competition Grows

Shares of South Korean semiconductor giants Samsung Electronics and SK Hynix plunged on Tuesday, extending a steep selloff as investors weighed rising competition from Chinese memory chipmakers and growing uncertainty surrounding the artificial intelligence (AI) investment boom.

Samsung Electronics shares tumbled 7.5% to 231,750 won by 02:36 GMT, while SK Hynix dropped 8.4% to approximately 1.47 million won. Both companies were on track for their fifth consecutive trading session of losses, reflecting mounting pressure across the global semiconductor industry.

The downturn followed reports that Chinese chip manufacturer ChangXin Memory Technologies (CXMT) had achieved progress in developing an advanced DRAM architecture known as 4F². The technology could significantly improve memory density, potentially strengthening China's position in the global memory chip market.

CXMT reportedly plans to introduce server-grade DDR5 memory products incorporating the new design by the end of 2026. The development has heightened concerns that Chinese semiconductor companies could challenge established South Korean manufacturers, potentially increasing competition and putting downward pressure on memory chip prices.

The negative sentiment also affected U.S. semiconductor stocks. Micron Technology declined 4% during Monday's trading session, while SanDisk fell 6%, highlighting broader investor anxiety about China's technological advancements and the long-term profitability of memory chip producers.

South Korea's benchmark KOSPI index plunged nearly 7% to 5,944.31 points, reflecting widespread selling pressure in the country's equity market.

Foreign investors sold a net 2.335 trillion won, equivalent to approximately $1.6 billion, in South Korean shares. Meanwhile, retail investors purchased a net 1.311 trillion won, suggesting domestic buyers were attempting to capitalize on falling stock prices.

Beyond Chinese competition, investors are increasingly questioning whether the rapid expansion of AI infrastructure spending can sustain the elevated valuations of semiconductor companies.

Samsung and SK Hynix have benefited from strong demand for advanced memory chips used in AI servers and data centers. However, concerns about excessive investment, future supply growth, and potential pricing pressures have prompted investors to reassess the sector's outlook.

The latest declines underscore the vulnerability of semiconductor stocks to shifting AI investment expectations and intensifying global competition, particularly as Chinese manufacturers accelerate their efforts to expand into advanced memory technologies.