Shares of South Korean memory chip giant SK hynix tumbled more than 15% on Monday, marking the stock's worst single-day decline on record and dragging the benchmark KOSPI index down by 9%, which triggered a market-wide trading halt.

The sharp sell-off was driven by a confluence of factors, reigniting market concerns that the memory chip industry cycle may have reached its peak.

The immediate catalyst for the plunge was a performance forecast report from a domestic Korean brokerage. The report projected SK hynix's second-quarter revenue at 80.9 trillion won and operating profit at 60.4 trillion won, representing year-on-year increases of 264% and 556%, respectively. However, the operating profit figure was about 8% below the market consensus estimate of 65 trillion won.

Analysts explained that SK hynix has a higher proportion of revenue from High Bandwidth Memory (HBM) compared to its peers. Since HBM prices are typically locked in via long-term supply agreements, they cannot be raised significantly in the short term to match market conditions, leading to a lower increase in average selling prices than the market average.

The same brokerage simultaneously lowered its operating profit forecasts for 2026 and 2027 by approximately 9% and 11%, respectively, from its previous estimates. The firm emphasized that this adjustment was not due to a deterioration in fundamentals but was a normalization exercise accounting for long-term supply agreements. It maintained its target price of 3.8 million won and a "buy" rating.

Other analysis pointed out that investors had anticipated a volume ramp-up of HBM4 chips starting in the second quarter, but this significant scaling appears not to have materialized yet.

The memory chip sector has recently experienced a remarkable rally. Some institutions have predicted the memory chip bull market could extend until 2027, with SK hynix dominating the HBM market with roughly a 58% share.

However, following the steep price surge, valuations have become elevated. Coupled with underlying concerns about potential oversupply from capacity expansions, the market has grown highly sensitive to any negative signals. Analysis suggests that while the current memory upcycle is far stronger than expected, the fundamental assumption that cycle dynamics will eventually normalize limits further upside potential at current levels.