Storage-focused exchange-traded funds (ETFs) experienced a significant decline at the market open. At the time of writing, the leveraged product tracking Samsung Electronics Co., Ltd. (SSNLF) was down 14.27%, while a similar fund for SK Hynix fell 12.6%.

This movement followed a sharp downturn in the South Korean equity market at the opening bell, with the benchmark KOSPI index dropping over 4%. Among individual stocks, shares of Samsung Electronics Co., Ltd. fell more than 6% following its earnings release, and SK Hynix shares declined over 4%.

The preliminary results for the second quarter of 2026 from Samsung Electronics Co., Ltd. showed a substantial increase in both revenue and profit, driven by the ongoing AI boom which has pushed up memory chip prices. The company's quarterly operating profit reached a record high, surpassing market expectations.

According to the preliminary figures, the operating profit for the April-June period was 89.4 trillion won, a dramatic increase compared to the same period last year. However, it is noteworthy that despite the strong performance of its memory business, the company's overall results are still under internal structural pressures.

Some analysts anticipate that losses in the company's foundry and logic chip (LSI) businesses may have widened this quarter, partly due to the proportional allocation of bonus expenses across the semiconductor division. Furthermore, there is a view that the memory chip sector is approaching a peak in its rate of change, with factors like narrowing year-on-year DRAM price increases, flattening inventory improvements, and topping earnings-per-share revisions.

In the short term, the sector faces pressures from concentrated positioning, increased volatility, and potential fund rotation, which could weigh on share prices. The long-term outlook, however, remains positive, with expectations for significant profit growth by 2027.