SK Hynix stock plunged 13% on July 28, 2026, amid a global chip sector sell-off triggered by reports of China’s breakthrough in advanced microchip manufacturing technology. The South Korean memory chipmaker’s shares fell to 1.55 million won, marking one of the steepest single-day declines in recent weeks as investor concerns about competition from Beijing’s chipmaking capabilities intensified.
The immediate catalyst was news that China’s state-owned Shanghai Yuliangsheng has begun mass-producing deep ultraviolet lithography machines—equipment critical to manufacturing advanced microchips used in AI systems. According to tech publication The Information, leading Chinese chipmakers are expected to receive their first deliveries of these machines later this year, potentially reducing China’s dependence on Western equipment suppliers like Dutch giant ASML.
The selloff rippled across Asia and beyond. South Korea’s KOSPI index collapsed nearly 11% on the day, with Samsung Electronics also plunging more than 12%. Japan’s Nikkei and Taiwan’s Taiex both sank more than 4%, while ASML fell more than 8% in European trading. In the US, Nvidia dropped 5%, wiping $250 billion from the world’s largest listed company, while SanDisk tanked 11%.
SK Hynix shares have now fallen nearly 50% from all-time highs reached in June 2026, putting South Korea’s KOSPI index on track for its worst month since 1997. The decline reflects a broader reversal in investor sentiment toward semiconductor stocks that had surged on expectations of massive artificial intelligence infrastructure spending.
Valuation Concerns Deepen Amid Competitive Pressure
The chip sector’s weakness extends beyond today’s China-driven shock. For weeks, investors have questioned the sustainability of AI capital expenditure and the lofty valuations assigned to memory chipmakers. SK Hynix, which had gained over 500% in the past year on soaring demand for high-bandwidth memory chips powering AI servers, faced mounting skepticism about whether those gains could be justified.
Jing Jie Yu, an analyst at Morningstar, attributed the market’s sharp reaction to China’s technological progress. “We believe the market was likely spooked by the progress of China’s chipmaking equipment capabilities, and was worried that this progress would threaten the competitive position of global chipmaking and chip equipment leaders,” Yu said, according to The Telegraph.
Stephen Innes of SPI Asset Management offered a broader perspective on the selloff, noting that the decline reflects not a collapse in semiconductor demand but rather a shift in investor risk appetite. “What has changed is the market’s willingness to capitalise those promises at almost any price,” Innes said. “The AI trade spent the past several years behaving like a flywheel: rising equity values encouraged more spending, more spending validated higher earnings expectations, and those expectations pushed valuations higher again. Now that same wheel is beginning to throw investors off at speed.”
Deep ultraviolet lithography, the technology China has begun producing domestically, remains a step below the most advanced extreme ultraviolet lithography mastered by ASML. However, it is sufficient for many advanced chip applications. US export controls have historically prevented Western companies from selling their most advanced equipment to China, but Shanghai Yuliangsheng’s domestic capability could alter that competitive dynamic and reduce China’s technological isolation in chipmaking.
SK Hynix is scheduled to report second-quarter earnings on July 30, 2026, with Samsung set to follow. The earnings reports may provide insight into whether current demand trends support the sector’s valuations or confirm investor concerns about the sustainability of the AI spending boom.
Sources
- The Telegraph — China’s chip breakthrough triggering global tech rout, SK Hynix and Samsung plunging more than 12%, KOSPI falling nearly 11%, analyst commentary from Morningstar and SPI Asset Management
- Yahoo Finance — SK Hynix stock decline amid AI financing concerns, KOSPI index plunge, chip sector sell-off
- Reuters — SK Hynix shares falling 15% after Nasdaq debut, valuation concerns over AI capex longevity
- The Wall Street Journal — China’s Moonshot AI Kimi K3 model release intensifying chip stock selloff on July 17
- CNN — Chipmaker Micron down 30% since record highs, broader chip sector weakness
