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Samsung, SK hynix investors dump shares on Nvidia crash

By Jie Ye-eun

Published : April 22, 2024 - 17:16

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Samsung logo flag hangs outside its office building in southern Seoul (left) and SK hynix headquarters in Icheon, Gyeonggi Province (Newsis) Samsung logo flag hangs outside its office building in southern Seoul (left) and SK hynix headquarters in Icheon, Gyeonggi Province (Newsis)

Investors of the two Korean chip makers – Samsung Electronics and SK hynix -- dumped their shares Monday after Nvidia, the US chip giant, lost almost 10 percent Friday -- its worst day since March 2020.

Market heavyweight Samsung Electronics and its chip rival SK hynix opened weaker in the day compared to Friday’s closing. Samsung and SK hynix fell 1.93 percent and 0.98 percent, respectively, to end trading at 76,100 won ($55.14) and 171,600 won on the country’s benchmark Kospi market. Their shares suffered falls even though the Kospi gained 1.45 percent to close at 2,629.44 points on the same day.

On Friday, Nvidia recorded the second-worst daily loss of market capitalization for any US company ever, losing about $2 trillion in market value in just one trading session. The price crash came as its foundry partner, Taiwan Semiconductor Manufacturing Co., of announced sluggish first-quarter earnings results. Nvidia, which occupies about 80 percent of the global artificial intelligence chip market, entrusts most of its self-designed AI chip manufacturing to TSMC.

Nvidia’s stock price, which jumped 95 percent this year, has recently shown bearish moves as the valuation burden caused by a short-term surge and concerns about the bursting of the AI bubble. Market watchers predict that investors are also trying to take profits from rapidly rising technology stocks due to the setback related to their expectations of a base interest rate cut in the US and the added risk from the tensions in the Middle East.

Small investors’ concerns are deepening after having enjoyed a bullish trend in the two chipmakers’ shares, recently backed by Nvidia’s stock rally. Samsung shares once hit the 52-week high of 86,000 won on April 8 but continued to decline and slipped below 80,000 won. SK hynix also soared up to 191,400 won on April 12 but turned downward to the 160,000-won level.

While an increasing number of investors have been making posts showing their nervousness in local online communities, market watchers say that the chip industry is currently passing through a low point and suggest investors see it as an opportunity to buy.

“The semiconductor industry is bottoming out, and their performance will improve in the coming months,” Park Seung-young, an analyst at Hanwha Investment & Securities, said. “Stock prices will see a correction, but the (upward) cycle has not been reversed, which means it is a good strategy to take advantage of the correction to accumulate more stocks.”

Market experts also said the upcoming first-quarter earnings announcements of global Big Tech firms, including Samsung Electronics, SK hynix, Meta and Microsoft scheduled for this week will determine the direction of chip stocks.

“First-quarter earnings will become a key indicator for investment strategy,” said Shin Seung-jin, an analyst at Samsung Securities. “It still seems valid to hold semiconductor stocks with solid performance in this earnings season.”