The two chipmakers initially attracted bargain hunters after recent declines but reversed course sharply during afternoon trading, reflecting cautious sentiment following Samsung's disappointing market reaction to its latest earnings update.
Samsung shares fell as much as 7.6 per cent, while SK Hynix declined as much as 5.2 per cent during the session. Earlier in the day, both stocks had briefly recovered, with Samsung gaining as much as 1.4 per cent and SK Hynix rebounding 5.8 per cent.
The reversal suggested that early buying interest was not strong enough to overcome broader investor concerns about the future pace of memory industry growth.
Earnings optimism meets valuation concerns
The decline followed a sharp sell-off in Samsung shares a day earlier after the company released preliminary second-quarter earnings.
Although Samsung estimated that quarterly operating profit could surge 19-fold, investors were not fully convinced, with expectations for artificial intelligence-related semiconductor demand already priced into valuations.
The weak reaction triggered a broader pullback in AI-linked technology stocks, extending into U.S. markets where major chip companies also recorded significant losses.
Analysts said the semiconductor earnings season is still in its early stages and expectations for strong results remain largely positive. However, market focus has shifted towards whether memory price growth can continue at the same pace in the second half of the year.
Memory chip supply is expected to remain tight through the third quarter, but investors are increasingly watching for signs that pricing momentum could weaken as customers become more cautious about rising costs.
Samsung target price cut
Park Yuak, an analyst at Kiwoom Securities, lowered his target price for Samsung Electronics by about 9 per cent to 390,000 won ($257.15).
He cited rising costs for components such as central processing units (CPUs) and package substrates, which are contributing to higher prices for personal computers and smartphones.
According to Park, the increased cost pressure could make customers more hesitant about purchasing additional memory chips.
Samsung shares last traded at 281,000 won.
SK Hynix listing plan fails to lift sentiment
Investor enthusiasm surrounding SK Hynix's reported plans for a potential U.S. listing failed to provide meaningful support for the stock.
Market participants remained focused on broader industry fundamentals, particularly the outlook for memory pricing and the sustainability of strong earnings growth.
Analysts noted that while demand for AI-related memory products remains robust, investors are becoming more selective as expectations rise.
Memory prices remain key earnings driver
JPMorgan said memory prices will remain the most important factor influencing semiconductor earnings during the second half of the year.
The bank said supply remains below demand despite growing resistance from customers facing higher costs.
It added that conventional NAND chip pricing could perform better than some investors expect, supported by strong demand from major U.S. cloud computing companies, often referred to as hyperscalers.
U.S. chip stocks lead global decline
The decline in South Korean semiconductor shares followed a broad overnight sell-off in U.S. chip stocks.
Shares of Intel, Micron and AMD fell 9.7 per cent, 4.7 per cent and 6.5 per cent, respectively.
The Philadelphia Semiconductor Index (SOX) also dropped 4.7 per cent.
The weakness in U.S. semiconductor stocks was triggered partly by concerns that Samsung's strong earnings outlook had already been reflected in market valuations.
Samsung's 6.9 per cent share decline on Tuesday accelerated a wider retreat from artificial intelligence-related investments, which later spread across Wall Street.
Despite continued demand for AI infrastructure and advanced memory products, investors are now assessing whether chipmakers can deliver further earnings growth after a period of strong gains.