Hong Kong chip stocks slide 8% as global semiconductor rout deepens

Hong Kong-listed semiconductor stocks fell as much as 8% on July 27, joining a global rout that has wiped hundreds of billions of dollars from chipmaker valuations as investors reassess AI infrastructure spending and memory supply dynamics.

"The selloff reflects a growing recognition that memory supply is catching up with demand faster than the market anticipated," said Rachel Kim, semiconductor analyst at Edgen. "When the KOSPI drops 29% in a month, driven primarily by Samsung and SK Hynix, it signals a structural repricing, not a tactical pullback."

Montage Technology (瀾起科技, 06809.HK) led the decline, falling 7.94%, while Hua Hong Semiconductor (華虹半導體, 01347.HK) dropped 7.68% and GigaDevice (兆易創新, 03986.HK) slid 7.48%. The losses tracked a broader downturn that has hit AI memory stocks particularly hard. Micron Technology has fallen 33% from its 12-month peak, Sandisk has dropped 50%, and SK Hynix — which went public in the US in July at $149 per share — recently fell below $137, roughly 30% below its post-debut high. South Korea's KOSPI index has plunged about 29% over the past month, entering bear market territory after an 11% decline on Monday alone.

The selloff has spread beyond memory. Nvidia has fallen about 17% from recent highs, while Taiwan Semiconductor Manufacturing has declined about 20%, suggesting investors are broadly reassessing AI infrastructure valuations. The trigger: memory manufacturers have expanded high-bandwidth memory capacity aggressively while NAND and DRAM production continues to increase. China's ChangXin Memory Technologies recently held a widely anticipated IPO that could fund another wave of domestic memory expansion, adding competitive pressure over the coming years.

Supply catches up with demand

The AI memory boom had been one of the semiconductor industry's most powerful rallies. Micron surged 657% from its 12-month low before the correction, while Sandisk gained more than 2,700% and Seagate rose 405%. Those gains were built on a simple thesis: HBM production was sold out years in advance as AI accelerator demand exploded, allowing suppliers to command premium pricing. That shortage is now beginning to ease as capacity additions come online.

Manufacturers have expanded HBM capacity aggressively while NAND and DRAM production continues to increase. At the same time, China's CXMT just held a widely anticipated IPO that could fund another wave of domestic memory expansion, increasing competitive pressure over the coming years. Even after losing one-third to one-half of their value, every company except newly public SK Hynix still trades hundreds of percentage points above where it began the AI memory run — a reminder of just how extraordinary the previous rally had become.

The correction has been particularly severe for companies most exposed to the AI memory trade. Western Digital has fallen 42% from its peak, while Seagate has declined 34%. The declines reflect a market that had priced in years of elevated profitability driven by HBM shortages — a scenario that is now unraveling as supply catches up. The Hang Seng Index and Hang Seng Tech Index also came under pressure as the semiconductor weakness rippled through Hong Kong's broader market.

What it means for investors

For investors, the question is whether the AI memory cycle has merely paused or begun turning lower. Memory has historically been among the semiconductor industry's most cyclical businesses — shortages eventually become oversupply, pricing falls, profits compress, and valuations follow. While AI demand remains far stronger than previous PC or smartphone cycles, stock prices often peak well before earnings do. Even after their corrections, many memory companies continue trading at valuation multiples that assume years of elevated profitability, expectations that may prove optimistic if supply expands faster than demand. Patient investors may find better entry points if the correction continues to play out, as memory stocks rarely bottom after the first leg down.

This article is for informational purposes only and does not constitute investment advice.