Samsung, SK Hynix stocks tumble amid AI sector jitters

Seoul's stock market plunged over 11% on Wednesday, with the Kospi index falling 11.73% after a similar drop the previous day. The downturn is driven by a sharp decline in technology stocks, particularly South Korean semiconductor manufacturers Samsung Electronics and SK Hynix, which lost 12% and 18.5% respectively.

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SK Hynix is raising its capital expenditures towards the upper end of the 40 trillion won range (24 billion euros) while remaining silent on shareholder returns and long-term contract pricing, which is raising investor concerns.

SK Hynix reported a record net profit increase of 1242% for the second quarter of 2026, fueled by demand for AI infrastructure. However, investors reacted negatively to the company's decision to increase capital expenditures and its silence on shareholder returns and long-term contract pricing. This has amplified existing fears about the profitability of major AI players and heightened concerns over potential overproduction.

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The amounts needed to set up AI infrastructure are increasingly high, fueling fears of a speculative bubble. And investors' patience is dwindling regarding the profitability of these investments.

Adding to the market's unease are China's advancements in semiconductor manufacturing processes, which could intensify global competition. Analysts note that the substantial investments required for AI infrastructure are raising concerns about a speculative bubble, with investor patience wearing thin regarding returns. The growing competitive threat from China is seen as another significant factor contributing to market volatility.

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China is becoming a major threat to American dominance in AI. Chinese competition is another key factor in volatility.