SK Hynix’s Divergent Paths: Record HBM Output and a Bear-Market Stock Collide

South Korea’s SK Hynix sees record semiconductor exports and a $26.5B ADR debut, yet stock plunges 15% in a day, triggering leveraged ETF losses and regulatory crackdowns.

The numbers coming out of South Korea’s semiconductor industry are spectacular: semiconductor exports surged 180% in the first 20 days of July to $22.1 billion, helping push total overseas shipments to a record $54.9 billion. SK Hynix, the country’s top maker of high-bandwidth memory chips for artificial intelligence, sits at the center of that boom. Yet its stock has spent July lurching from one crisis to the next – a 15% single-day rout, a regulatory clampdown on leveraged products, and a slide into bear-market territory for the broader Kospi index.

SK Hynix shares managed a 5.44% rebound on Tuesday to close at 1,860,000 won, but that came only after Monday’s 4.23% drop to 1,764,000 won, part of a broader sell-off that pushed the Kospi down 4.46% to 6,516.27 points – a level 25% below its June peak, technically a bear market. Samsung Electronics and SK Hynix together account for more than half of the index, a concentration risk that has amplified every tremor.

The epicenter of the recent volatility was SK Hynix’s debut on Nasdaq. On July 9, the company raised $26.5 billion through an American depositary receipt offering priced at $149 each – the largest such issuance by a non-US firm – with a subscription ratio of seven times. The ADR jumped 12% on its first day, but the euphoria quickly soured. On July 13, the Seoul-listed stock plunged 15% in its worst single-day loss in two decades, forcing a trading halt on the Kospi, while the ADR fell 7.9% to $154.70. The premium of the ADR over the Seoul price ballooned to 51% before narrowing to around 30.7% by mid-month, a gap that SK Group Chairman Chey Tae-won had inadvertently stoked with an Instagram post.

That premium drew retail investors into a complex arbitrage, but many ended up trapped in leveraged products. Since May 27, South Korean retail investors have poured 14 trillion won ($9.5 billion) into leveraged exchange-traded funds tracking single stocks. The KODEX SK Hynix 2x Leverage ETF lost roughly 70% of its value from its June high. Across the market, margin-call notifications hit more than 1 million retail accounts, and between 320,000 and 360,000 were fully liquidated. At the peak, forced sell-offs reached 344.2 billion won in a single day.

Regulators stepped in sharply. From July 16, no new single-stock leveraged ETFs were permitted, and from August 5 the minimum margin requirement for such products will rise to 30 million won. On the first day of the new rules, turnover in the 16 affected ETFs reached $8.6 billion, underscoring the scale of the unwind.

Chairman Chey added to the unease on July 20 when he described current memory-chip prices as “abnormally high” and said they needed to come down to avoid dampening customer demand. He predicted that demand for AI memory chips would rise 60%–100% between 2026 and 2027, with the broader memory market growing 50%–60%. CEO Kwak Noh-jung warned that 2027 could bring the worst supply shortage in the company’s history. SK Hynix plans to expand capacity at its domestic sites in Yongin and Honam as well as in the US, and Chey cautioned that future bottlenecks might shift from chips themselves to power cables, electrical equipment, and raw materials.

The fundamental picture remains formidable. SK Hynix posted an operating profit of 47.2 trillion won in fiscal 2025, surpassing Samsung Electronics’ 43.6 trillion won for the first time. Its share of the HBM market stands between 58% and 61%, well ahead of both Samsung and Micron. That strength has not gone unnoticed by analysts. Barclays initiated coverage with an Overweight rating, noting a price-to-earnings ratio of roughly 5.5, below Micron’s 6.66. Morgan Stanley called the recent Kospi sell-off a buying opportunity, citing a market P/E below six times earnings. Foreign investors bought a net 894 billion won of Korean stocks over eight consecutive sessions.

Still, not all sentiment is bullish. Citigroup downgraded Korean equities and upgraded Chinese stocks, arguing that valuations are cheaper and AI opportunities are emerging in China. The immediate direction for SK Hynix may hinge on US megacap earnings. Alphabet reports on July 22, with Microsoft, Meta, and Amazon due the following week. Hana Securities estimates that if Alphabet beats expectations, SK Hynix could rally 17% in the following four weeks; a miss would knock off 3%.

Meanwhile, Chinese DRAM maker CXMT is set to debut on Shanghai’s Star Market on July 24, aiming to raise $8.6 billion in what could be Asia’s biggest IPO of the year. CXMT has already lifted its DRAM market share from 3% to 8% in a single quarter, a reminder that SK Hynix’s leadership will be contested even as it navigates the chaos in its own stock.