China's Storage Technology Breakthrough Amplifies AI Valuation Concerns, Samsung and SK Hynix Stocks Open Over 7% Down

On October 13, the sell-off of South Korean semiconductor stocks further expanded. As of 11:20 AM Beijing time, Samsung Electronics fell by 7.29%, SK Hynix dropped by 8.35%, and the Korea Composite Stock Price Index (KOSPI) decreased by 6.05% to 5997.99 points. The Korea Exchange activated the sell-side "Sidecar" mechanism during early trading, suspending algorithmic trading of KOSPI constituent stocks for 5 minutes, indicating that market selling pressure has significantly intensified.

Market concerns primarily stem from the enhanced competitiveness of Chinese firms. Changxin Storage recently disclosed that it has made key progress on a memory chip architecture that Samsung Electronics and SK Hynix are also advancing. Although the technological breakthrough is still far from forming large-scale, commercial competitive capacity, funds have begun to reassess the impact of Chinese storage manufacturers catching up on the future pricing power and valuation premium of the two South Korean giants.

Marginal changes in AI investment logic have also amplified the downward trend. Broadcom CEO Hock Tan stated that demand for computing infrastructure still exceeds the current supply in the industry, and the supply-demand gap may persist until 2029 or even 2030; as hardware bottlenecks such as chips, memory, and power gradually ease, capital acquisition capability may become the biggest constraint on AI expansion. Many AI investors are unclear about the business models they are betting on but have set extreme expectations, ultimately making this round of investment "almost like being in a casino."

Chief Investment Officer Ha SeokKeun indicated that investors are worried whether this semiconductor upcycle can continue until 2028 and beyond, and this uncertainty will continue to suppress the valuation of South Korean chip stocks.

After Samsung announced record earnings last week, its stock price still did not receive a significant boost, indicating that market focus has shifted to the sustainability of growth. The previous strong rise in the South Korean stock market heavily relied on Samsung and SK Hynix, which now also bears more concentrated adjustment pressure. The KOSPI has fallen about one-third from its June peak and has breached the 200-day moving average; since October, foreign investors have net sold over $6 billion in South Korean stocks.

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