SK Hynix tumbles as KOSPI hits a circuit breaker
At 9:35 a.m. on July 13, the Korea Exchange activated a circuit breaker after the KOSPI’s intraday decline widened to 6%. SK Hynix fell as much as 12%, slipped below KRW 2 million, and touched its lowest level since June 11. From its June 25 record high, the stock was down 33%.
A Hong Kong-listed 2x long Hynix ETF dropped more than 22% on the day. The reversal has been fast. June 25 was also the day SK Hynix reached its all-time high.
A three-week swing from euphoria to retreat
Over the past 12 months, SK Hynix shares in Seoul had surged about 850%, pushing its market capitalization above $1 trillion. On June 22, the company set a record closing mark and briefly overtook Samsung Electronics in market value. The report said SK Hynix holds more than 56% of the global HBM market, supplies about 70% of HBM orders for NVIDIA’s new AI servers, has long-term contracts booked through 2028, and posted a 72% operating margin in the first quarter.
The turn began in early July. News that Meta planned to sell AI computing capacity was read by some buyers as a sign that hyperscalers may have built too much capacity. Morgan Stanley’s chief U.S. equity strategist then recommended reducing semiconductor exposure. Since the start of July, the Philadelphia Semiconductor Index has fallen more than 13%.
When that message hit Seoul, the KOSPI dropped nearly 8% in the first trading session after the transmission, and SK Hynix lost more than 12% in a single day, wiping out more than $100 billion in market value. Volatility then intensified. On July 3, the KOSPI rebounded more than 5% and rose enough to trigger a trading curb that halted program buying. On July 7 and July 8, the market hit circuit-breaker levels on the way down. By the July 8 close, the KOSPI had fallen more than 20% from its June 19 peak, entering a technical bear market.
SK Hynix has already logged more than 50 trading days this year with a move of over 5% in either direction. The figure for all of last year was 37. According to the report, the number of sidecar and circuit-breaker events in the first half of this year has already exceeded the record set during the 2008 financial crisis.
Strong earnings were not enough to calm the market
On July 7, Samsung Electronics released second-quarter guidance showing operating profit of KRW 89.4 trillion, up 1,810% year over year. The figure beat market expectations and even exceeded Samsung’s full-year 2025 profit. The stock still fell sharply that day, and the broader market hit a circuit breaker.
The report’s point was simple: once a stock’s price reflects much more than current earnings, even a strong result can fail to answer the market’s next question. Investors were looking at whether AI infrastructure spending had overheated and whether massive chip capex would earn an adequate return.
Nasdaq celebration, Seoul pressure
On July 10, SK Hynix listed its American depositary receipts on Nasdaq. The ADR was priced at $149 and raised $26.5 billion, topping Alibaba’s 2014 deal to become the largest U.S. IPO by a foreign company. It ranked second in U.S. stock issuance history overall, behind SpaceX last month, according to the report. Demand was more than seven times covered, with over 500 institutions participating.
The ADR opened at $170, climbed as high as $177, and finished its first day at $168.01, up nearly 13%. Based on the closing price, SK Hynix was valued at about $1.22 trillion, overtaking Micron to become the world’s most valuable memory-chip company. At the bell-ringing ceremony, CEO Kwak Noh-Jung said the global memory industry was heading toward the worst supply shortage in history by 2027. Chey Tae-won said future demand would grow exponentially.
That success came with a cost for Seoul investors. The offering’s reference price was initially set using the June 23 close of KRW 2.555 million, but as the stock fell the benchmark had to be revised down to KRW 2.425 million on July 3, shrinking the fundraising size by about $1 billion. The deal includes 17.79 million new common shares, which will begin trading in Seoul on July 29.
Reuters reported that the company plans to gradually convert more than $20 billion of proceeds into won and send the funds back to Korea around July 15. The report also said the exchange rate had weakened to KRW 1,528 per U.S. dollar. Because ordinary Korean shares face limits on conversion into ADRs, the U.S.-listed ADR is now trading at about a 17% premium to the Seoul-listed stock.
KIS forecast becomes a fresh trigger for selling
The final spark behind the July 13 selloff came from a profit preview by local brokerage KIS. The report projected second-quarter operating profit for SK Hynix at KRW 60.4 trillion, up 556% from a year earlier. That was still roughly 8% below the market consensus of KRW 65 trillion.
The gap, according to the report, comes from pricing structure. HBM is sold under long-term contracts, so contract prices do not immediately move higher with the spot market. In the second quarter, spot prices for standard DRAM rose about 30% quarter over quarter and NAND prices rose about 50%. SK Hynix, with the highest HBM mix, captured less of that pricing upside than peers.
KIS still kept its overweight rating and a target price of KRW 3.8 million. Its argument is that as the industry shifts toward three- to five-year contract structures, the valuation anchor moves away from a single quarter’s price increase and toward the durability of high profitability.
Leveraged products and retail margin amplify every move
The report argues that the same AI correction became much more violent in Korea because of market structure. The KOSPI has more than 800 constituents, yet Samsung Electronics and SK Hynix account for more than 43% of the index weight. In May, Korea allowed single-stock leveraged ETFs. After that, those two names and their derivatives at one point made up 84% of stock-market trading value.
One CSOP 2x long Hynix ETF grew to more than $16 billion in assets and had risen more than 1,000% this year at one point, making it the largest product of its kind globally. One institutional estimate cited in the report said that for every 1% market move, related Korean leveraged ETFs generate about $9 billion in mechanical rebalancing demand. Because these products rebalance daily, they are forced to sell more into declines. Around July 2, forced liquidation trades in leveraged products tied to Hynix accounted for the bulk of daily turnover in the underlying stock. Over the past month, more than 90% of investors in Hynix leveraged ETFs have been in loss.
Retail leverage is the other side of the move. As of the end of May, Korea’s margin financing balance had climbed above KRW 38 trillion, a record high. Foreign investors have been net sellers of roughly $95 billion of Korean equities this year. Since the June 19 top, they have sold for 13 straight trading days, including KRW 3.73 trillion on July 7 alone. Over the same stretch, Korean retail investors, who call themselves “ants,” bought about $80 billion net and absorbed nearly all of that selling.
The split is about the cycle, not survival
Bulls and bears are working from different cycle assumptions. The report said Kwak Noh-Jung is betting that shortages will last beyond 2030. Bears are focused on future supply instead. Samsung Electronics and SK Hynix could invest more than KRW 1,000 trillion over the next decade, the Korean government plans four more chip plants, and Micron is expanding at the same time.
The market is now watching the next dated events on the calendar. Around July 15, more than $20 billion of proceeds is expected to start moving through the FX market. At the end of the month, 17.79 million new shares will begin trading in Seoul. For retail investors who have already put about $80 billion into the market this year, the next test will come from supply, liquidity, and leverage all at once.