SK Hynix Inc. (NASDAQ: SKHY) shares have plunged roughly 41% this month, marking their worst monthly performance since October 2008, as investors reassess valuations ahead of the company’s second-quarter earnings report on Wednesday, July 29. The sell-off, which accelerated Tuesday with a 14% drop in Seoul trading, reflects broader fears that Chinese capacity expansion could normalize memory prices and erode the pricing power that has driven recent profitability.

The market turmoil follows the blockbuster Shanghai debut of ChangXin Memory Technologies, whose shares soared more than 460% on their first day of trading. This event reignited concerns that China could rapidly expand DRAM production, triggering a broad selloff across global memory stocks including Micron Technology Inc., SanDisk Corp., and Samsung Electronics Co Ltd. Investors are now pricing in a future normalization of memory prices rather than relying on today’s record profitability levels.

Earnings Expectations vs. Market Sentiment

Despite the sharp correction, Wall Street expects SK Hynix to report robust second-quarter results, with revenue projected at $55.7 billion and earnings per share (EPS) at $4.79. These figures would represent a 243% year-over-year increase in revenue and a 604% surge in EPS, underscoring the continued strength of the AI-driven memory boom. For six consecutive quarters, SK Hynix has met or exceeded expectations, beating earnings estimates by nearly 50% last quarter and topping revenue consensus by more than $2.3 billion.

Recent Quarterly Performance

Structural Demand Remains Strong

The disconnect between the stock’s performance and fundamentals is striking. This week, Nvidia Corp. and South Korea’s SK Group unveiled a partnership tied to more than $500 billion of planned AI infrastructure investments. The initiative includes large-scale AI data centers and a strategic collaboration with SK Hynix on high-bandwidth memory (HBM). This reinforces the structural trend that AI models are becoming larger and inference workloads are rising, requiring more advanced memory for every new generation of Nvidia chips.

What the Numbers Show

The divergence between SK Hynix’s historical margin leadership and current investor skepticism highlights a shift from pure revenue growth to sustainability concerns. While the company has benefited from high demand for AI memory, the nearly 41% decline from peak levels suggests valuations were priced for perfection. The focus now shifts to whether management can convince investors that the AI buildout still has years—not quarters—left to run, despite near-term pressures from Chinese competition and potential margin compression.

SK Hynix denied reports that it is pursuing or has decided to acquire Intel's Ohio semiconductor campus, clarifying that it has no plans for the purchase. The South Korean memory chipmaker issued the statement in a Korea Exchange filing to refute a media report claiming negotiations were underway to buy the site for front-end memory chip production in the U.S. within five years.

In the filing, SK Hynix acknowledged it is continuously reviewing various investment and acquisition opportunities for business purposes but explicitly stated it has not pursued or decided to acquire Intel's Ohio site and Fab. A company spokesperson separately confirmed, "We have no plans for an acquisition."

The clarification follows a report by Korea JoongAng Daily suggesting SK Hynix was negotiating to acquire the Ohio campus. Intel broke ground on the New Albany, Ohio, campus in 2022, initially planning to invest about $28 billion in two leading-edge fabrication plants as part of a broader $100 billion vision for the site. The company has since pushed back the project's operational timeline to between 2030 and 2031.

Intel's Ohio Campus Status

The U.S. government has been pushing for expanded domestic AI memory manufacturing. Earlier this month, Commerce Secretary Howard Lutnick said he was in discussions with Samsung Electronics and SK Hynix about expanding their U.S. footprint, noting they would ultimately have "no choice but to follow" Micron Technology's domestic manufacturing push.

SK Group Chairman Chey Tae-won said the company is evaluating locations in the U.S. and South Korea to build semiconductor fabrication plants "the fastest and largest" to meet growing AI memory demand. SK Hynix has emerged as a major beneficiary of AI demand, particularly for high-bandwidth memory used in NVIDIA's AI accelerators. The company recently listed American depositary receipts on Nasdaq to broaden access for U.S. investors.