Why Samsung and SK Hynix shares declined heavily on Thursday?

by Girls Rock Investing
Samsung, SK Hynix and Micron DRAM chips

Samsung Electronics and SK Hynix shares plunged on Thursday, dragging South Korea’s benchmark Kospi lower as semiconductor stocks faced renewed pressure following Democratic victories in the US midterm elections.

The Kospi index fell more than 5%, triggering a temporary suspension of program selling during early trading.

Samsung shares dropped more than 7.5%, while SK Hynix dropped close to 9.5% as investors reassessed the outlook for AI infrastructure spending and chip demand.

The two semiconductor giants together account for roughly half of the Kospi’s total market capitalization, making their movements particularly influential for the broader index.

Their combined market value had reached around 50% of the benchmark ahead of Thursday’s selloff.

US election results deepen AI concerns

Democrats won control of both the House of Representatives and the Senate in Wednesday’s midterm elections, raising expectations of closer scrutiny of the rapidly expanding AI infrastructure industry.

Investors are concerned that greater oversight of energy and water consumption, stricter permitting requirements and potential restrictions on data-center construction could slow the pace of investment in the US.

That could have implications for Samsung and SK Hynix, which are major suppliers of high-bandwidth memory (HBM) used in AI accelerators and data-center systems.

Any slowdown in infrastructure expansion could affect future demand for advanced memory chips.

The Philadelphia Semiconductor Index also fell around 3% on Wednesday, while mixed results from US chipmakers Qualcomm and Arm added to concerns.

Qualcomm reported handset chip revenue of $5.14 billion, below expectations, while Arm’s record revenue failed to satisfy investors seeking stronger growth signals.

SK Hynix’s US expansion faces regulatory hurdle

SK Hynix is also facing uncertainty over its expansion plans in the US after Washington held up approvals for American chipmaking equipment needed to expand production at its Dalian facility in China.

According to Reuters, the company is seeking export licenses from the US Commerce Department, arguing that additional production in China would generate revenue to help finance its proposed NAND manufacturing facilities in Marcy, New York.

The investment could initially involve around $45 billion, with the potential to reach $100 billion over time.

Executives from SK Hynix subsidiary Solidigm have reportedly held nearly 10 meetings with Commerce Department officials since late August, but approval remains pending.

Samsung expands HBM plans

Separately, Samsung is preparing to use its second foundry facility in Taylor, Texas, to manufacture base dies for HBM chips supplied to Nvidia and AMD, according to a Maeil Business Newspaper.

Construction is expected to formally begin this month, with mass production targeted for 2030.

Most of the facility’s reported output has already been secured through customer orders, with AMD accounting for the larger share. Samsung has yet to officially confirm the report.

Samsung is also facing changes in its labor structure, with employees filing an application to establish a sixth labor union amid reported disagreements within existing unions over compensation and wage negotiations.

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