SK hynix (SKHY) shares plummeted 7.15% during intraday trading on Tuesday, as a confluence of negative catalysts rattled the memory chip sector and sparked a widespread selloff across global semiconductor stocks.

The decline was fueled by intensifying competition fears after Chinese DRAM maker ChangXin Memory Technologies (CXMT) surged 466% on its Shanghai trading debut, raising concerns about future oversupply and pricing pressure. Reports of China's advances in deep ultraviolet (DUV) lithography machines further added to worries that domestic chipmakers could challenge industry incumbents at lower costs. Simultaneously, skepticism over the sustainability of AI infrastructure investments grew after Nvidia's credit default swaps spiked to a record high amid disclosures of AI-related financing deals exceeding $750 billion, fueling fears of a "circular financing" model. Brokerage forecasts that memory chip prices could peak in 2027 also triggered profit-taking across the sector.

The selloff in SK hynix ADRs mirrored the heavy losses in Asian markets, where South Korea's KOSPI index plunged over 10% and SK hynix's Korean-listed shares dropped more than 14%. As a key supplier of high-bandwidth memory chips to Nvidia, SK hynix remains highly sensitive to shifts in AI investment sentiment and competitive dynamics in the DRAM industry, with the upcoming quarterly earnings report adding to the heightened volatility.