Why Samsung and SK Hynix stocks are failing to follow Wall Street’s chip rebound

Samsung Electronics and SK Hynix failed to follow Wall Street’s chip rally on Tuesday as Korean investors remained cautious after July’s sharp market swings.

The Kospi opened 1.5% higher after the Nasdaq Composite gained 2.13% and the Philadelphia Semiconductor Index advanced about 1% on Monday.

The market later reversed, with the Kospi swinging from a 2.1% gain to a 2.8% decline. Samsung Electronics plunged over 2% while SK Hynix dropped 0.8%.

The muted response showed that one US session was insufficient to erase Korea’s positioning problems or concerns about memory supply.

Wall Street’s rebound was not a clean memory signal

Monday’s US advance reflected a broad return to technology and growth shares as oil fell, Treasury yields eased and Amazon’s post-earnings rally supported AI-linked companies.

The narrower chip signal was less powerful, with the semiconductor index rising only about 1%.

Mizuho trading-desk analyst Jordan Klein said investors remained cautious before earnings from AMD, SanDisk and other chipmakers, according to Investor’s Business Daily.

That hesitation matters for Samsung and SK Hynix because their profits depend more directly on DRAM, NAND and high-bandwidth-memory pricing than those of many US semiconductor companies.

The Korean stocks also entered Tuesday after extreme movements.

Samsung and SK Hynix each lost about 8.8% on Monday after Friday’s record Kospi rebound had sent both sharply higher, including a near-30% jump for SK Hynix.

Korea’s leverage hangover is still shaping prices

The July rout was intensified by crowded positions and single-stock leveraged exchange-traded funds tied to Samsung and SK Hynix.

As per market data, the assets in those products collapsed from $50 billion in late June to $17 billion last week, forcing investors to reduce exposure as prices fell.

JPMorgan strategists led by Rajiv Batra told Reuters that the leveraged ETF unwind was complete and hedge-fund deleveraging was about 90% finished.

That is encouraging for longer-term buyers, but it does not mean investors will immediately rebuild the same concentrated positions.

William Brattan of BNP Paribas told Reuters that long-only investors were reluctant to manage holdings moving with such violence.

His comment helps explain why a favourable Wall Street close produced only limited support in Seoul.

China fears obscure resilient memory fundamentals

China’s CXMT remains the clearest industry concern as the company is considering another Beijing DRAM plant, raising the possibility that its capacity could more than double if planned projects are completed.

Morningstar analyst William Kerwin told MarketWatch that CXMT accounted for only about 6% of global DRAM production last year, limiting its immediate ability to disrupt Samsung, SK Hynix and Micron.

He nevertheless warned that simultaneous expansion by all four producers could pressure prices by 2028.

The near-term outlook is stronger. Moody’s upgraded SK Hynix to A3 from Baa1, saying it expects robust profitability and cash generation over the next 12 to 18 months.

Samsung has also said memory supply should remain tight through 2027, supported by multiyear customer contracts.