Why SoftBank, Samsung and SK Hynix are taking the worst hit in Asia’s AI rout

SoftBank extended Asia’s technology rout on Friday, sliding 9.7% by Tokyo’s midday break as investors continued pulling money from the region’s most crowded artificial-intelligence trades.

The fall followed a brutal Thursday in Seoul, where SK Hynix tumbled 13%, Samsung Electronics lost 8.8% and the Kospi sank 6.4%.

The companies occupy different parts of the AI supply chain, but share the same vulnerability.

Each has become a high-conviction proxy for years of uninterrupted spending on chips, memory and data centres.

SoftBank and Korea’s chip giants became the easiest AI trades to sell

SK Hynix offers the clearest listed exposure to high-bandwidth memory used alongside Nvidia’s accelerators.

Samsung combines conventional memory, HBM and an advanced foundry business.

SoftBank is not a chipmaker, but its Arm stake and investments in OpenAI, data centres, robotics and other technology assets give it broad, leveraged exposure to the AI ecosystem.

That concentration works powerfully when confidence rises. It becomes a liability when investors question how quickly expensive infrastructure will generate returns.

SoftBank chief Masayoshi Son said this week that AI could require $5 trillion of annual investment by 2040 and dismissed bubble concerns as “absurd”.

SoftBank’s cumulative OpenAI commitment is expected to exceed $60 billion by the end of 2026, reinforcing how much the group’s valuation depends on continued enthusiasm for large-scale AI investment.

The Asian losses followed another Wall Street retreat.

The Philadelphia Semiconductor Index fell 4.3% on Thursday, while SanDisk dropped 13% and Micron, Intel and AMD lost between 5% and 6%.

Strong results from TSMC were not enough to stop investors cutting exposure to hardware winners.

Leverage and crowded ownership are turning weakness into a rout

Moves approaching 10% cannot be explained by earnings expectations alone as market structure is magnifying the pressure, particularly in South Korea.

HSBC strategists led by Herald van der Linde said the rally’s main vulnerability was its ownership pattern.

Retail investors have kept buying aggressively, frequently using borrowed money and leveraged exchange-traded products, while foreign investors remained heavy sellers.

“That can be exhilarating on the way up,” the strategists wrote in a note reported by Business Insider. “It can also become destabilising on the way down,” as forced rebalancing accelerates selling.

HSBC estimated that Korean single-stock leveraged products expanded to about $12 billion within a month, with another $15 billion listed in Hong Kong.

They represented as much as 35% of the Kospi turnover during some sessions.

Regulators have responded by suspending new single-stock leveraged ETF listings and tripling the minimum deposit required for new leveraged investments.

Goldman Sachs has argued that position unwinding amplified recent falls in Samsung and SK Hynix, rather than signalling that the semiconductor cycle has suddenly broken.

Strong demand is no longer enough when expectations are this high

The operating picture remains stronger than the share prices suggest.

Meritz Securities analyst Kim Sunwoo estimates that DRAM producers are fulfilling only 75% to 80% of orders, with that rate potentially falling towards 60% in 2027.

“With supply shortages set to deepen, memory prices and earnings are likely to continue improving,” Kim told Reuters.

That imbalance supports the case for an eventual recovery in Korean chip shares.

The harder question is duration. Investors are no longer debating whether AI demand is strong today.

They are asking whether it can continue to outrun new capacity, higher financing costs, and pressure on hyperscalers to prove that their spending produces adequate returns.