SK Hynix shares plunge 11% as Asia sees tech rout, tracking U.S. chip losses

Asian semiconductor stocks tumbled Thursday, as a sell-off in U.S. chipmakers spilled into the region, with SK Hynix continuing to see massive volatility since its U.S. listing last week.

Shares of SK Hynix tumbled over 11% in Seoul, reversing the previous session's 8% rally. The stock had logged its steepest one-day decline on Monday, as investors locked in profits amid growing worries over AI spending.

Domestic rival Samsung Electronics dropped more than 7%. Seoul Semiconductor fell more than 5%, LG Innotek lost about 1%, and Samsung SDI was down over 2%.

The weakness spread across the region. In Japan, AI-linked equipment makers Advantest fell more than 6%, SoftBank Group slid nearly 7%, Tokyo Electron lost over 5%, while Renesas Electronics declined 4%.

The losses track a sell-off in U.S. semiconductor shares overnight. Micron Technology sank 8%, Intel lost more than 4%, while Lam Research and Advanced Micro Devices each fell about 3%.

"Today's decline is largely a follow-on to the US session overnight," said Rolf Bulk,  Head of Semiconductor & Infrastructure Equity Research at Futurum Group.

He pointed to a proposed moratorium on data-center construction in New York and reports that CoreWeave was exploring hedges against future declines in memory prices as marginally negative signals.

New York Governor Kathy Hochul on Tuesday ordered a temporary halt to new large-scale data center projects while the state develops stricter standards governing their energy, water and environmental impacts.

Bulk told CNBC the latest weakness reflected profit-taking after a sharp rally rather than a deterioration in the industry's fundamentals, adding that structural demand for AI infrastructure and memory chips remains intact.

Demand for high-bandwidth memory chips continues to outstrip supply as cloud providers race to build AI infrastructure, allowing leading memory makers such as SK Hynix and Micron to maintain strong pricing power.

The chip sell-off also come despite strong results from ASML. The Dutch chip-equipment maker raised its full-year sales guidance for a second time this year, forecasting revenue of 43 billion euros to 45 billion euros, above analysts' expectations, while outlining plans to further ramp production of its extreme ultraviolet lithography machines.

Louis Kondratev, trader at XFUNDs, noted the recent pullback reflects how crowded semiconductor trades have become after a prolonged AI-driven rally.

"Semiconductors alone now make up roughly 20% of the S&P 500, which is incredibly difficult to sustain," he said. He noted that during the dot-com bubble of 2000, semiconductors were just over 8% of the index, and they have historically averaged between 2% and 5%.

While earnings momentum has remained robust, he also warned the pace of gains may become harder to sustain as investors reassess lofty valuations.

"Earnings momentum has been very strong, but it's mostly concentrated in semiconductors, and that momentum may begin to slow as valuations find their place," he said.