SK Hynix Shares Fall Nearly 11% in Seoul on Lowered Profit Outlook

Shares of SK Hynix Inc. plunged in Seoul on Monday, falling sharply despite a strong U.S. market debut for the company's American Depository Receipts late last week. The drop followed a brokerage report that tempered expectations for the memory chip giant's second-quarter earnings.

Profit Forecast Triggers Sell-Off

SK Hynix stock (KS:000660) slid nearly 11% to 1,942,000 won, marking an over one-month low. According to South Korean media, the sell-off was triggered by a research note from Korea Investment & Securities Co.

The brokerage forecast SK Hynix’s second-quarter operating profit would be 60.4 trillion won ($40.3 billion), which is below the market consensus estimate of 65 trillion won. The report suggested that the average selling price of the company's high-bandwidth memory (HBM) chips saw a smaller increase than anticipated, partly due to its dominant market share.

Broader Market Impact

The significant drop in the heavyweight chipmaker's stock had a wider market impact, contributing to an over 5% loss in South Korea's benchmark KOSPI index. The decline was severe enough to prompt the Korea Exchange to briefly halt trading.

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This negative performance in its home market contrasted sharply with the company's U.S. listing. On Friday, SK Hynix's American Depository Receipts surged nearly 13% in their Nasdaq debut after the company raised approximately $26 billion from the offering.

Context and Outlook

SK Hynix has been a major beneficiary of the artificial intelligence boom, which has fueled outsized demand for its advanced memory chips. Despite the revised short-term forecast, the company is still expected to report strong year-over-year growth when it releases its full second-quarter results later in July.

However, the stock's rapid ascent has raised questions among investors about the sustainability of its AI-driven earnings surge. Looking ahead, a report from ChosunBiz suggested that selling prices for HBM are expected to increase in line with the broader market average starting in the third quarter.