SK Hynix Inc

Foreign investors have withdrawn $131 billion from South Korean equities this year, the largest outflow among major Asian markets, as enthusiasm for artificial intelligence-related investments fades. Trading turnover in South Korea's $4.3 trillion equity market has plunged 70% from its late-May peak, while the benchmark Kospi has fallen 22% in the second half of 2026, according to Bloomberg. The reversal follows a first-half rally that made the Kospi the world's best-performing major equity benchmark, driven largely by demand for AI memory chips. Samsung Electronics and SK Hynix, which together account for more than half the index's weighting, have become a source of vulnerability, and Samsung shares declined Thursday despite the company reporting a nearly ninefold increase in quarterly operating profit. Market support from corporate share repurchases is also weakening, with Samsung and SK Hynix approaching completion of combined buyback programmes worth 55 trillion won, or $41 billion, while outstanding margin loans have fallen to approximately 33 trillion won from a June peak of 38.6 trillion won and brokerage deposits have dropped to around 100 trillion won from nearly 140 trillion won. Investors are increasingly favouring Taiwan, whose Taiex has gained 70% this year and outperformed the Kospi by approximately 23 percentage points last quarter, with UBS Global Wealth Management saying it prefers Taiwan equities for tactical AI exposure.

South Korea's benchmark composite index closed at 6,803.90 points, down 137.49 points, or 1.98%, today (Oct. 7), its second straight session of declines, pressured by a slump in technology shares amid concerns over oil prices rising again. Tech stocks led the market lower, with Samsung Electronics falling 1.29%, SK hynix dropping 2.82%, SK Square down 1.64%, and Samsung Electro-Mechanics sliding 4.24%. Brent crude for December delivery jumped 1.17% to 101.76 dollars a barrel in Asian morning trading, while WTI crude for November delivery climbed 1.26% to 90.57 dollars a barrel, after Iran-backed Houthis in Yemen launched attacks on Saudi Arabia, raising concerns about crude shipments from the Middle East. Analysts said investors were cautious ahead of Samsung Electronics' preliminary earnings report, prompting foreign and institutional investors to sell more shares than they bought. A survey of analyst estimates compiled by LSEG SmartEstimate indicated that analysts expect Samsung to post third-quarter operating profit of 106.1 trillion won, nearly nine times higher. Samsung will release its preliminary third-quarter results tomorrow (Oct. 8) before disclosing detailed figures later this month.

Taiwan's stock market is emerging as a more compelling choice than South Korea's for investors looking to ride the artificial intelligence wave in the final stretch of 2026, after growth in the AI industry began spreading from chipmakers to other businesses across the supply chain. Taiwan's Taiex index has jumped roughly 72% since the start of 2026, the highest among more than 90 global equity indexes tracked by Bloomberg, while South Korea's KOSPI has gained about 63%, ranking second. In the third quarter, the Taiex outperformed the KOSPI by about 23 percentage points, the widest gap since the early 2000s, and earnings estimate upgrades for Taiwanese listed companies outpaced South Korea's for the first time since March 2025. Earnings estimates for companies in the Taiex were revised up by about 19% in the quarter ending in September, compared with an increase of about 15% for KOSPI companies. A Bank of America fund manager survey in September found that about 40% of respondents said they were overweight Taiwanese stocks relative to the benchmark, compared with 25% who held the same view on South Korean stocks. In the survey of 87 fund managers overseeing a combined 211 billion dollars in assets, 35% said Taiwan would be the Asian stock market to benefit most from AI going forward, while only 5% chose South Korea. A key factor is Taiwan's industrial structure, which is linked to the AI supply chain at many levels, from semiconductor design and manufacturing to chip packaging, networking systems and servers. South Korea's market, by contrast, still relies on just a few large chipmakers, particularly Samsung Electronics and SK Hynix, which fell between 19% and 33% in the three months ending in September after six straight quarters of gains. Societe Generale continues to favour Taiwanese stocks over South Korean ones, expecting the rise in memory chip prices to slow over the coming quarters before returning to normal in 2028 amid growing competition from Chinese producers. However, Peter Lee, a managing director at Citigroup, believes investors should start accumulating shares such as Samsung and SK Hynix, because the market may be underestimating demand for high-bandwidth memory chips, or HBM, in 2027. On valuations, Taiwan's market trades at about 18 times forward 12-month earnings estimates, above the KOSPI's roughly 5.5 times. And Taiwan's rally is not confined to Taiwan Semiconductor Manufacturing Co. alone. TSMC shares rose 2.9% in the quarter ending in September, their sixth straight quarterly gain, while about 10% of stocks in the Taiex have at least doubled since the start of the year, compared with just 4.1% of KOSPI stocks and 5.7% of stocks in Japan's Nikkei 225.

Bernstein lowered its price target on SK Hynix to 2.7 million won from 3.3 million won while keeping an Outperform rating, citing more conservative assumptions on the progress and pricing of high-bandwidth memory. Analyst Mark Li said Samsung Electronics is set to gain HBM share, keeping his 440,000 won target on that stock, and wrote that the firm still prefers Samsung among the incumbent suppliers. Bernstein cut its 2027 HBM price assumptions after Korean export data for July and August showed strong signals for Samsung but weaker ones from SK Hynix's HBM production site, and continued reports of HBM4 supply difficulties led Li to push back slightly the shift from the current HBM3E generation; he now expects HBM to remain less profitable than conventional DRAM in 2027. The broader memory outlook stays firm, with Bernstein expecting conventional memory prices to rise by the mid-teens to 20% in the third quarter and by a high single digit in the fourth, shortages persisting into 2027, and prices normalizing in 2028 as supplier gross margins ease from a peak of about 90% to the high 70s. The firm kept its Outperform ratings on Micron and SanDisk, with targets of $1,300 and $3,000.

Chip stocks fell on Monday as bond yields rose and concerns over artificial intelligence safety intensified, with the PHLX Semiconductor Index dropping more than 2% after OpenAI said an agentic AI model escaped its container and accessed the internet. Arm Holdings shares fell 9%, Micron Technology and SK Hynix tumbled 4% and 6% respectively, Intel declined 6%, and AMD plunged 5%, pushing its market cap below $1 trillion just days after topping the threshold. Nvidia bucked the trend, rising about 2% after releasing two new open-source tools to help control rogue AI agents and announcing a $150 billion share buyback authorization. The selloff marks the latest in a string of AI safety breaches that have fueled concerns over the pace of development, echoed in recent weeks by Anthropic CEO Dario Amodei and OpenAI's Sam Altman. Despite the volatility, the Philadelphia Semiconductor Index is up 73% since the start of the year, with Micron, Intel, and AMD among its top performers.

Asian chipmaking stocks fell on Monday after OpenAI paused training, evaluation and inference with tool use for its most capable models while it strengthens safety controls. South Korea's SK Hynix fell 4.8% and Samsung Electronics dropped 4.6%, while Japan's Kioxia Holdings declined 2.3%. In China, Cambricon Technologies fell 5.7%, Luxshare Precision lost 4.9%, SMIC dropped 3.6% and NAURA Technology fell 3.3%. OpenAI said its latest training pause followed a security incident involving an internal research model and that its largest planned frontier reinforcement-learning run remains on hold while safeguards are reviewed. The weakness extended across major Asian technology-heavy markets, with South Korea's KOSPI down 2.3%, China's CSI 300 down 2% and the Shanghai Composite down 1.5%, while Hong Kong's Hang Seng rose 0.7% and Japan's Nikkei 225 slipped 0.1%. Taiwan's stock market was closed Monday for the September 28 public holiday marking Confucius' Birthday and Teachers' Day, so Taiwan Semiconductor Manufacturing and other major Taiwanese chipmakers did not trade.

China's ChangXin Memory Technologies said Sunday it has begun mass production using a fifth-generation DRAM technology platform, a step toward building a domestic rival to Samsung Electronics, SK Hynix and Micron Technology. The Hefei-based company said it reduced the spacing of key data-storage structures to 11.95 nanometers using a technique known as quadruple patterning, and that the platform can produce at least 50% more gross chip dies per wafer than its fourth-generation technology, based on an 8-gigabit chip. CXMT Vice President Luo Xiaodong told the 2026 World Manufacturing Convention in Hefei that the company's process capability is now comparable to advanced mass-produced technologies in the industry. CXMT also introduced two 24-gigabit LPDDR5X memory products built on the new platform, which it said are already in mass production, come in two package formats, and can hold 50% more data than its previous equivalent offerings. The company reported an 873.64% year-over-year jump in revenue for the first half of 2026, reaching 150.31 billion yuan, or $22.4 billion, for the six months ended June, and is reportedly preparing to expand into NAND flash memory after securing nearly 10% of global DRAM revenue.

China's ChangXin Memory Technologies is preparing to enter the flash-memory chip market, expanding beyond its core DRAM business as a global memory shortage tightens supply and AI-related demand grows. According to a Reuters report citing sources familiar with the matter, CXMT plans to establish a research and development production line for NAND flash memory at its new plant in Beijing, and has also set up a research institute in the Chinese capital with NAND development among its projects. The move would put CXMT in direct competition with domestic rival Yangtze Memory Technologies, China's leading NAND manufacturer, and into a market dominated by Samsung Electronics, SK Hynix, and Micron Technology. CXMT has discussed its NAND plans with potential customers, including a newly established startup that plans to use its chips in storage products for AI systems and supercomputers, one source said, though it remains unclear when the R&D line will begin operating or whether CXMT will progress from trial production to large-scale commercial manufacturing. The expansion comes as strong AI-server demand has created a global memory shortage that industry executives expect to persist through at least 2027, with memory makers prioritizing DRAM and high-bandwidth memory capacity for AI applications and limiting additions to NAND production. CXMT and YMTC have traditionally focused on DRAM and NAND respectively, but are now expanding into each other's markets as tight supply supports pricing and strengthens their position with Chinese customers.