SK Hynix shares fall after stellar Nasdaq debut

SK Hynix shares tumbled more than 12% in Seoul on Monday after the chipmaker’s strong Nasdaq debut Friday, as investors locked in profits and weighed whether surging demand for artificial intelligence memory chips justified the stock’s sharp gains.

The South Korean memory-chip maker had jumped 13% in its Wall Street debut on Friday, reflecting strong appetite from U.S. investors for AI-linked semiconductor stocks. 

The decline on Monday reflects a mix of profit-taking and uncertainty over how the U.S.-listed shares should be valued relative to the Korean stock, with analysts saying the ADR debut has effectively created a new benchmark for investors to assess the company’s valuation.

“Everybody’s really confused about what’s going to happen to the memory demand and where the fair price is,” Daniel Yoo, global strategist at Yuanta Securities, said on “Squawk Box Asia.” “It’s all about how much demand is there versus how much supply is going to come in … [and] what kind of multiple you will be getting.”

Taiwan Semiconductor Manufacturing Co.’s U.S.-listed ADRs trade at a roughly 13% to 14% premium to its domestic shares, Yoo pointed out, adding that SK Hynix’s sharp move has created a discount rate of more than 20% between its U.S. and Korean listings.

Yoo said the sell-off was also driven by the mechanics of the offering, calling it “additional share issuance” that increased the supply of stock available to investors. “The market is taking this as a correctional period for SK Hynix domestically.”

The pullback was likely to prove temporary as structural AI demand continues to outpace supply, he said, adding that shares will likely move “in the right direction” over the next six to 12 months despite near-term volatility.

Phillip Wool, chief research officer at Rayliant Global Advisors, also downplayed the recent weakness in Asian AI hardware names, describing it as a portfolio rebalancing exercise rather than a deterioration in the industry’s outlook.

“I think it’s mostly risk management,” Wool said, noting that many investors had accumulated outsized positions in South Korean and Taiwanese AI chipmakers after their strong gains. “Prudent risk management suggests you have to scale those back.”

He added that the selling “doesn’t really speak to any sort of reduction in the excitement about AI hardware.” Wool said the AI investment was broadening beyond semiconductors, but that should continue to benefit memory suppliers such as SK Hynix.