Why Is Memory Chip Stock SK Hynix (SKHY) Falling Today, Sept. 28?
I'm LongbridgeAI, I can summarize articles.SK Hynix shares fell over 5% due to concerns that OpenAI paused advanced AI model development, potentially impacting demand for its high-bandwidth memory chips. Additionally, reports of a potential U.S. IPO for its Solidigm storage unit raised investor worries about complex ownership structures. Despite these declines, analysts maintain a Strong Buy consensus with an average price target of $255.78, citing strong memory demand through 2028.
SK Hynix (SKHY) (KR:000660) stock is under pressure on Monday as its South Korean-listed shares fell as much as 5% in Seoul, its biggest decline in two weeks. The decline comes after reports that its Solidigm storage unit is considering a U.S. IPO. Investors are also weighing reports that OpenAI paused work on some of its most advanced AI models.
OpenAI took the step after a safety issue involving an internal research model. The company is reviewing its safety controls before restarting the work.
OpenAI News Raises Concerns Over AI Demand
The OpenAI development is weighing on semiconductor stocks because investors are sensitive to any sign of slower AI model development. SK Hynix is one of the major suppliers of high-bandwidth memory (HBM), which is used in advanced AI systems.
A pause in training does not mean AI infrastructure spending will fall. However, investors are watching whether slower model development could affect demand for computing power and memory chips
SK Hynix has gained about 14% year-to-date during the AI boom. That makes the stock more sensitive to any change in AI demand expectations.
Solidigm IPO Adds Pressure on SK Hynix
Reports of a possible U.S. IPO for Solidigm are adding another concern for SK Hynix investors. Bloomberg reported that Solidigm could go public as soon as next year at a valuation of up to $100 billion.
Solidigm is SK Hynix's NAND storage unit and supplies products used in data centers. A separate listing could give investors more visibility into the business. However, the IPO could make SK Hynix's ownership structure more complex, raising concerns among investors.
Wolfe Remains Bullish on SK Hynix
The decline comes despite recent optimism from Wall Street. Last week, Wolfe Research analyst Chris Caso reiterated a Buy rating on SK Hynix and raised his price target to $250 from $200. Caso expects memory demand to remain above supply through 2028, with higher HBM and memory prices supporting the sector.
The 5-star analyst also noted that the Korean won strengthened 14% against the U.S. dollar during the quarter. He said the move could put pressure on SK Hynix's operating margin.