SK Hynix earnings miss sparks record South Korea selloff

SK Hynix reported a record second-quarter operating profit of 60.5 trillion won on Wednesday, a 557% surge from a year earlier, but the results fell short of the 64 trillion won forecast compiled by LSEG SmartEstimate, triggering a brutal selloff in South Korean equities and sending shockwaves through global semiconductor markets.wtvbam+1

Shares of the memory chipmaker plunged nearly 20% intraday before closing down 9.6% in Seoul, while the Kospi index tumbled as much as 12.6% before finishing 6% lower — its second consecutive day of steep declines. The two-day rout has wiped as much as $2.18 trillion from South Korea's equity market, according to Reuters.investing+1

Earnings Miss and Investor Frustration

Quarterly revenue rose 257% year-over-year to 79.3 trillion won but missed the 84 trillion won estimate. Analysts attributed the shortfall to slower-than-expected shipments of advanced high-bandwidth memory (HBM4) chips, which delayed revenue recognition during the quarter.investing

Investor sentiment soured further after the company's earnings call offered no concrete shareholder return policy despite sitting on 88 trillion won in net cash. SK Hynix said it planned to disclose details "later this year" but could not provide timing, size, or structure. The company also announced it would raise capital spending to the high-40 trillion won range this year, up from 30.2 trillion won in 2025.investing

"SK needs to come up with a concrete shareholder return policy to turn around investor sentiment," said Greg Roh, head of research at Hyundai Motor Securities.investing

Contagion Across Global Markets

The selloff radiated across Asia, with Samsung Electronics falling as much as 14% before closing down 5.2%, Taiwan's TSMC ↗ 2.96% declining 3.5%, and Japan's Kioxia plunging 13.9%. In the United States, U.S.-listed SK Hynix shares fell 5.9% in premarket trading, while Nvidia ↗ 1.34%, AMD Advanced Micro Devices, Inc. ↗ 2.95%, and Micron ↘ 2.05% all extended losses.cnbc+2

The rout has been amplified by the unwinding of leveraged positions among South Korean retail investors who piled into chip stocks using borrowed money. South Korea's Finance Minister Koo Yun-cheol apologized during a parliamentary session for the introduction of single-stock leveraged ETFs, saying they "had not been considered carefully enough," and announced the government is reviewing market stabilization measures.wtvbam

Long-Term Deals and Lingering Doubts

SK Hynix President Song Hyun-jong insisted demand remains strong. "Major customers are still requesting more memory supply," he said on the earnings call, adding the company has concluded about 10 long-term supply agreements — typically five-year contracts with financial safeguards — and is negotiating more. But analysts cautioned that such deals, while providing visibility, may cap near-term pricing gains.investing

The selloff comes ahead of a Federal Reserve rate decision and earnings from major hyperscalers including Microsoft ↗ 0.92% and Meta ↗ 0.30%, leaving investors bracing for further volatility as they assess whether massive AI infrastructure spending can sustain chip sector earnings at current levels.wtvbam