Memory chip stocks slide as Friday’s Korean rally unravels

Memory chip stocks fell sharply in pre-market trading on Monday, led by Micron Technology ↗ 0.24%, which dropped 4.2% to trade near $788, losing the $800 level again. The decline came as investors questioned whether Friday's historic rebound in South Korean markets was anything more than a short-covering rally, with Samsung Electronics and SK Hynix ↘ 0.98% both giving back gains in early Seoul trading.invezz

Asian Selloff Ripples Westward

Samsung fell 6.48% and SK Hynix dropped 6.69% in Seoul on Monday morning, while the Kospi slid more than 4%. The losses followed Friday's extraordinary session, during which Samsung surged 26.81% and SK Hynix hit its 29.95% daily limit-up, helping the Kospi post a record 17.91% single-day gain.tradingeconomics+1

That rebound came after the benchmark had lost more than 17% across three sessions in a week marked by forced deleveraging in leveraged single-stock exchange-traded funds. Peter Kim, senior managing director at KB Securities, told Reuters last week that the sell-off was "not driven by fundamental deterioration" but by fragile sentiment and forced unwinding of leveraged positions.invezz

Multiple Headwinds Converge

SanDisk Western Digital Corporation ↘ 2.83% fell 4.16%, Seagate Technology ↘ 3.71% lost 3.79%, and Western Digital dropped 3.15% in pre-market trading alongside Micron. The broad weakness reflected several intersecting pressures: Apple ↘ 1.17% has been pushing back against soaring DRAM costs and seeking to diversify its supply sources, Japan introduced new semiconductor export control policies, and short sellers increased positions against memory names.tradingkey

Gary Tan, a portfolio manager at Allspring Global Investments, said "strong is no longer enough" in the current AI market, with investors demanding clearer signals on long-term supply agreements and the durability of the memory cycle.invezz

Bull Trap or Buying Opportunity?

Han Ji-young of Kiwoom Securities had warned that profit-taking was likely early this week after the Kospi's unprecedented Friday jump, according to the Korea JoongAng Daily. The inability of chip shares to hold even one session after the rebound weakened the argument that markets had established a durable floor.invezz

Still, Forrester analyst Alvin Nguyen described the broader memory-stock sell-off as an "overreaction," arguing that manufacturers still cannot produce enough chips to satisfy demand and that shortages could persist until 2030.invezz