Samsung Electronics, SK Hynix and SoftBank plunged on Tuesday as investors worried about rising Chinese competition.
Weakening confidence in AI returns and higher financing costs added to the pressure.
Samsung fell 8.8% and SK Hynix dropped 9.3% by 10:40 a.m. in Seoul, sending the KOSPI down more than 6%. SoftBank lost 8.1% as Tokyo reopened after Monday’s holiday.
The sell-off followed another weak session for US chip stocks, with the Philadelphia Semiconductor Index dropping 2.7%.
Why Samsung and SK Hynix are falling as China’s CXMT closes the gap
The immediate new threat for Korea’s memory giants comes from ChangXin Memory Technologies.
CXMT says it has made progress on a 4F² DRAM cell architecture and plans to launch DDR5 server memory using the technology by year-end.
The design could reduce cell area by roughly one-third compared with the dominant 6F² structure, potentially increasing density.
CXMT has not proved it can manufacture the technology reliably at scale, making it premature to conclude that Samsung or SK Hynix has lost its technological advantage.
But its planned move into server memory challenges an assumption underpinning today’s exceptional memory margins: that advanced supply will remain concentrated among a handful of producers.
That matters even after Samsung forecast record quarterly operating profit of 107.4 trillion won. Strong profits are no longer enough if investors believe competition could eventually weaken scarcity pricing.
Why SoftBank is getting hit harder by doubts over AI returns
SoftBank faces a different version of the same problem.
The group completed its $30 billion follow-on investment in OpenAI this month, taking cumulative investment to $64.6 billion and ownership to about 13%. Masayoshi Son is also seeking up to $100 billion from Gulf investors for further AI investments.
That makes SoftBank particularly sensitive to questions over whether AI revenues can justify enormous capital commitments.
Mizuho’s Daniel O’Regan told Barron’s that no single catalyst explains the AI retreat, pointing instead to negative industry updates, memory and optical-stock weakness and profit-taking after a powerful run.
Why $106 oil and 5% yields are making the AI sell-off worse
The final pressure point is macroeconomic.
Brent traded around $105.90, while the US 10-year Treasury yield remained near 5.21%, close to last week’s 24-year high.
“Markets are rediscovering that geopolitics matters most when it feeds back into inflation,” Saxo strategist Charu Chanana told Reuters.
Higher oil threatens inflation, while elevated yields increase the discount rate applied to future AI profits. That means Samsung, SK Hynix and SoftBank are being forced to clear a higher valuation hurdle precisely as investors become less certain about how durable those profits will be.
The overnight change is therefore not one piece of bad news. Memory competition, AI monetisation and financing costs have suddenly become problems at the same time.
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