What Happened?
A number of stocks fell in the afternoon session after investors took profits following the chip sector's strong rally in the first half of the year as Middle East tensions escalated. SK Hynix shares fell over 5% in South Korea following its strong Nasdaq debut the previous week.
The selloff dragged down memory peers like Micron Technology and SanDisk. Adding to the weakness for memory stocks, a South Korean brokerage lowered its second-quarter earnings forecast for SK Hynix. Brokerage firm KIS projected SK Hynix's second-quarter operating profit at 60.4 trillion won, roughly 8% below the 65 trillion won market consensus.
The expected miss stems from the company's heavy reliance on long-term contracts for its premium High Bandwidth Memory (HBM) chips, a structure that effectively locked the manufacturer out of recent 30% to 50% price surges in the broader spot market. It is natural to assume that selling more premium AI chips would immediately expand profit margins. However, HBM economics work differently than standard memory. Because these advanced chips require massive upfront capital, they are typically sold through multi-year agreements that fix the price. Standard DRAM and NAND chips, by contrast, trade on the spot market where prices move freely.
Consequently, SK Hynix's heavy exposure to premium, fixed-price contracts placed a near-term ceiling on its pricing power even as broader market prices spiked. This revelation triggered a reassessment across a memory sector priced for perfection, accelerating profit-taking among investors who were already questioning the durability of AI capital spending. Adding to the defensive positioning, renewed tensions in the Middle East, including reports of US military action against Iran, pushed oil higher and encouraged a shift toward safer assets.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Semiconductor Manufacturing company Amkor (NASDAQ: AMKR) fell 6.9%. Is now the time to buy Amkor? Access our full analysis report here, it’s free.
- Analog Semiconductors company Himax (NASDAQ: HIMX) fell 7.3%. Is now the time to buy Himax? Access our full analysis report here, it’s free.
- Semiconductor Manufacturing company Entegris (NASDAQ: ENTG) fell 6.5%. Is now the time to buy Entegris? Access our full analysis report here, it’s free.
Zooming In On Himax (HIMX)
Himax’s shares are extremely volatile and have had 44 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock gained 8.8% on the news that the semiconductor sector continued to rebound from the previous week's sharp selloff amid bullish Wall Street updates.
Broadcom (AVGO) gained about 4.2% after it disclosed in an 8-K that it signed multi-year agreements with Apple through 2031 to supply custom ASIC silicon. Separately, bullish memory notes landed: UBS raised its Q3 DDR contract-pricing forecast to +32% quarter-on-quarter (from +17%) and reiterated DRAM undersupply "until at least 2Q28"; Citi added an upside catalyst watch on Micron; and BofA reiterated Buy ($1,550), arguing memory is "roughly 35-40% of cloud AI capex… yet memory stocks trade at sub-par 10x forward PE."
Goldman's trading desk flagged an oversold buy-the-dip setup after momentum factors fell 24% from their peak, the largest drawdown since Q1 2023. This was a sector recovery on top of a technical bounce and cheaper oil after OPEC+ lifted output. Two events reinforced it as SK Hynix's ~$28bn Nasdaq listing the previous week and Samsung's earnings later in the week kept the "memory super-cycle" story in the headlines.
Himax is up 65.8% since the beginning of the year, but at $14.14 per share, it is still trading 41.6% below its 52-week high of $24.19 from June 2026. Despite the year-to-date gain, investors who bought $1,000 worth of Himax’s shares 5 years ago would now be looking at only $945.89.
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