Samsung Electronics (005930.KS) and SK hynix (000660.KS) both fell in early trading on the 23rd in the wake of a sharp drop in U.S. technology shares, slipping below the 210,000-won and 1.2 million-won levels respectively. SK hynix eased concerns over a dual listing of its subsidiary by halting plans to take its U.S. unit Solidigm public, but funding pressures from expanded artificial intelligence investment and questions over profitability weighed on sentiment across the chip sector.
The KOSPI opened at 5,403.17 on the 23rd, down 130.60 points, or 2.36%, from the previous session, according to the Korea Exchange. The KOSDAQ began trading at 748.32, down 15.78 points, or 2.07%, falling below the 750 line.
Samsung Electronics traded at 208,250 won in early trade, down 6,250 won, or 2.91%, from the previous session, giving up the 210,000-won level. SK hynix fell to 1,199,000 won, dropping below the 1.2 million-won mark.
In a regulatory filing before the market opened, SK hynix said it was halting its review of a pre-IPO funding round and an initial public offering for Solidigm, its overseas subsidiary. The company said it had examined various funding options to expand production capacity and strengthen competitiveness, but reached the decision after taking capital market conditions and other factors into account.
In a separate statement, the company said Solidigm's growth potential and the need for investment had not changed, but that given recent capital market conditions and share price movements, it judged that it needed to reassess whether an IPO at this time was the most advantageous option for SK hynix and its existing shareholders.
Some analysts had expected the halt to the Solidigm listing to revive sentiment toward chip stocks in part. Han Ji-young, an analyst at Kiwoom Securities, said on the 23rd that "domestic stocks are expected to open lower on a correction in U.S. artificial intelligence shares driven by credit concerns at Meta, along with pressure from oil prices," but added that "SK hynix's disclosure halting its review of a Solidigm initial public offering is likely to contribute to improved sentiment toward chip stocks." The analyst also said domestic stocks could absorb panic selling early in the session and recover some of their losses during the day.
Despite those expectations, the weakness in domestic chip shares is attributed largely to renewed concerns over AI investment costs in U.S. markets overnight. The Nasdaq Composite closed at 26,008.86 on the 22nd, down 2.60% from the previous session and its steepest drop since June. The Standard & Poor's 500 also fell 1.21%. The Dow Jones Industrial Average, by contrast, rose 0.02%.
Meta's investment and funding plans were what heightened market unease. The company reported third-quarter results that beat market expectations but said it planned to issue a new class of non-voting shares to secure funds for AI investment. It also raised the lower end of its capital expenditure forecast for this year to $135 billion from $130 billion.
Concerns grew over whether the company could fund its large-scale AI investment from its own cash generation after third-quarter free cash flow came in at negative $2.12 billion, its first deficit since going public. Meta shares plunged about 7%, while Nvidia and Micron fell 4.4% and 6.3% respectively. The Philadelphia Semiconductor Index dropped 6.72%.
Brent crude rising above $113 a barrel on heightened geopolitical tension in the Middle East also weighed on sentiment. Doubts about returns on AI investment combined with concerns over high oil prices to increase downward pressure on domestic stocks.
NH Investment & Securities put the KOSPI's expected range for next week at 5,100 to 6,400 in a weekly investment strategy report published on the 23rd. It cited third-quarter corporate earnings and shareholder return policies as upside factors, and geopolitical risk as a downside factor.
