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South Korea’s two biggest chipmakers gave investors a wild ride this week, and crypto traders were paying close attention. Samsung Electronics and SK hynix both plunged more than 10% on Tuesday, dragging the Kospi index to its lowest level in three months. Just a day later, SK hynix reported a staggering 1,242% jump in quarterly profit.
That series attracted the interest of Bitcoin (BTC) traders, as South Korean semiconductor stocks are now seen as an early indication of sentiment in the wider market.
Heavy sell-offs in Seoul often impact US tech stocks before the Wall Street opening, and for most of the past year, BTC has been traded in step with AI stocks instead of being influenced by cryptocurrency-related news only. When the likes of Samsung and SK hynix have a bad night, many crypto firms consider this a signal of trouble ahead for risk assets.
Why crypto desks watch Seoul before New York opens
This relationship has developed to become stronger, thus it has gotten a reputation among market experts. According to Business Insider, the fast sell-off of Kospi has an influence on the stocks on the US market at the moment of opening of trades on Wall Street.
The movement that took place on Tuesday was a clear example. Samsung Electronics and SK hynix, which comprise a sizeable chunk of the Kospi’s market value, led the decline. Shares of SK hynix listed in the United States subsequently fell about 9%, and the Nasdaq 100 fell by nearly 2%.
Although neither of the two corporations has anything to do with cryptocurrency, they are nonetheless at the heart of the boom in AI infrastructure. When investors change their minds about their enthusiasm for artificial intelligence, they also often decrease their exposure to other risky assets as a result.
Recently, Bloomberg reported that the most recent decline in BTC caused losses also for firms that built large BTC treasuries, thus confirming the close relationship between crypto and market sentiments in a wider context.
A 1,242% profit jump that shares ignored
The earnings of SK hynix led to an even bigger market reaction. The company reported net profit for the second quarter of 94 trillion won, making it a record profit for a quarter. Operating profit increased by 557% to 60 trillion won on the back of revenue of 79 trillion won, although this profit figure was heavily inflated by a one-off gain from selling 10% of the shares of the flash maker Kioxia.
Nevertheless, even though the figures are impressive, investors continued to offload their shares. The price of shares of SK hynix had already decreased by 14% before the earnings announcement. The shares of both Samsung and SK hynix lost approximately 33% and 41% in a month.
Samsung, which releases its own earnings report on Thursday, expects to report a 1,800% rise in operating profit in the second quarter compared to the same period last year.
This difference matters to investors in Bitcoin. If stock prices go down even with strong profits, it might mean that investors are starting to look at future risk rather than current performance.
What is actually driving the selloff
The pressure is believed to come more from rising uncertainties over the speed of AI investments rather than falling demand for memory chips.
Investors are reportedly worried about the enormous borrowing needed to fund new AI data centers, according to a report by The Guardian. Meanwhile, China’s semiconductor industry is progressing steadily.
According to Information, Chinese manufacturers have started producing domestic equipment for deep ultraviolet lithography in large quantities, while the memory company CXMT’s market debut in Shanghai increased sales by 466%, adding to concerns about future competition.
Investors are also raising alarms about the sustainability of AI investment. News that Nvidia is working on a $250 billion data center in Ohio does not help matters because it brings back the concerns that the industry might be funding itself. According to JPMorgan Executive Director Joshua Meyers, “none of this seems fundamentally driven.”
This matters for crypto because sentiment-driven selloffs often spill over into other markets as well. When investors rush to eliminate risk, Bitcoin gets lost in the wave of other sell-offs as well.
What the signal is worth from here
The picture is mixed rather than clearly positive or negative. According to KB Securities analyst Kim Dong-won, costs of memory chips are predicted to increase by no less than 30% in quarter three due to potential supply constraints lasting until 2028. Moreover, SK Group reported a joint project with Nvidia in the amount of $500 billion, which increases the expectations of continuous robust investment in the AI sphere.
If investor interest in Korean chip stocks stabilizes, then many investors will interpret this as a returning risk appetite. Samsung will face the first set of challenges this week when it releases its earnings report.
Other tech titans, such as Microsoft, Meta Platforms, and Amazon, will publish their quarterly results after that, which are likely to clarify whether this week’s selloff was just a temporary decline in sentiment or marks the beginning of a sizeable market change that could also shape Bitcoin’s next move.
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