Shares in companies connected to artificial intelligence (AI) have experienced further declines after South Korean chipmaker SK Hynix reported results that fell short of investor expectations. This has led to the country's stock market tumbling for a second consecutive day.
Seoul's Kospi index, heavily influenced by semiconductor manufacturers, dropped by as much as 12.6% at one point on Wednesday. This follows a nearly 11% slump on Tuesday, bringing the index to its lowest level since early April. The market is now poised for a record two-day fall, representing a drop of over 40% from a peak reached just over a month ago. Japan's Nikkei index also saw a decline of 1.5%.
Despite reporting record profits for the second quarter, SK Hynix, a key producer of chips for AI datacentres, did not meet investor forecasts. This prompted a sell-off, with SK Hynix shares falling by as much as 16% and fellow chipmaker Samsung Electronics trading almost 10% lower. These two companies account for more than half of the Kospi's market capitalisation.
Analysts suggest that the disappointment over SK Hynix's earnings has highlighted investor concerns regarding the sustainability of tech companies' spending on AI technology. Gary Tan, a portfolio manager at Allspring Global Investments, noted that investors were seeking additional catalysts beyond strong results, particularly concerning long-term agreements and shareholder returns.
Shares in US chip companies, including Intel and Advanced Micro Devices, also fell on Wall Street on Tuesday. Taiwan's TSMC, the world's largest contract chipmaker, saw its shares decline by 3% in Taipei on Wednesday. South Korea's finance minister, Koo Yun-cheol, stated that the government is reviewing market stabilisation measures.