SK Hynix secures record Nvidia supply deal for HBM chips despite 41% stock decline, indicating major accelerator memory commitment
SK Hynix faces a pivotal moment as it navigates the confluence of a historic business achievement and severe market headwinds. The memory chip maker closed Friday at 1,759,000 won, down 8.34% on the day and more than 41% below its June 25 peak of 2,987,000 won—a monthly decline of nearly 32%. Yet simultaneously, the company has locked in a multi-year supply agreement with Nvidia valued between $500 billion and $750 billion, part of a broader $950 billion alliance between South Korean chipmakers and US technology giants including Nvidia, OpenAI, and Anthropic.
The Nvidia pact, confirmed by a senior adviser to South Korean President Lee Jae-myung during a San Francisco visit, secures long-term supplies of high-bandwidth memory chips—the specialized memory powering Nvidia's AI hardware and critically constrained across the industry. The deal encompasses large-scale data center construction targeting two gigawatts of power capacity, with facilities coming online by 2027. SK Telecom, a subsidiary of SK Hynix, will build a cloud business around Nvidia's Vera Rubin systems, while Nvidia Vice President Raj Mirpuri confirmed joint development of SK Hynix's next-generation memory. President Lee and Nvidia CEO Jensen Huang personally negotiated the terms.
Three distinct forces converged to create Friday's decline, none tied to the Nvidia deal's fundamentals. Alphabet's latest earnings triggered sector-wide profit-taking in AI stocks, dragging the semiconductor complex lower. A Seoul court ordered SK Group Chairman Chey Tae-won to pay a divorce settlement worth nearly $1 billion, raising governance questions that rattled retail investors. Most critically for near-term price action, the exchange window between SK Hynix's US-traded ADRs and Korean shares opens July 29, already compressing the ADR premium and generating additional selling pressure in Seoul.
The broader sell-off accelerated after a single analyst note from Seoul triggered the largest single-day loss in SK Hynix's history, rippling through the entire sector. South Korea's financial watchdog responded by tightening rules on leveraged single-stock ETFs, raising the minimum cash deposit requirement from 3 million won to 30 million won for retail traders to curb speculative volatility.
"The long-term outlook for memory chip makers remains intact," said Jung In Yun, founder of Fibonacci Asset Management, suggesting current weakness reflects positioning rather than fundamentals. The 14-day relative strength index sits at 40.1—near oversold territory but not yet flashing a definitive buy signal—while 30-day annualized volatility has reached 118.27%.
Consensus estimates from 14 local banks project second-quarter operating profit of 64.1 trillion won on revenue of 84.1 trillion won, driven by demand for HBM3E and HBM4 chips. If realized, SK Hynix's first-half 2026 operating profit would exceed 100 trillion won for the first time, validating the profitability of its specialized AI memory business. Management plans to invest $26.5 billion in next-generation production facilities, a commitment investors will scrutinize during the earnings call.
SK Hynix reports second-quarter results on Wednesday, July 29, just days after finalizing the Nvidia agreement. The timing provides management an unusually direct opportunity to connect new supply commitments with near-term guidance—specifically, whether the outlook confirms the deal's revenue impact and how the board plans to fund the $26.5 billion investment program. The earnings report will ultimately test whether the Nvidia pact can overcome governance concerns, ADR arbitrage pressure, and profit-taking that have transformed one of the year's biggest winners into a significant decline from its peak.