Why is SK Hynix stock sliding today?

SK Hynix shares experienced a significant drop of 7.2% to 296,000 won on Thursday, as a wave of instability swept South Korean semiconductor stocks following the Democratic Party's substantial victory in the U.S. midterm elections. This decline was further exacerbated by the release of weak earnings from competitors Arm and Qualcomm overnight.

Investors swiftly adjusted their valuations of AI-focused chipmakers in anticipation of potential tightening regulations from a Democrat-led Congress, which could impact the demand for high-bandwidth memory - SK Hynix's most profitable product. Another contributing factor was a Reuters report published the previous day, which disclosed that U.S. officials had delayed the approval of chip equipment export licenses necessary for SK Hynix to expand production in China.

This news, coupled with another concern regarding the company's $45 billion NAND chip factory investment proposal in New York, added to the regulatory pressures faced by SK Hynix. The combination of these domestic AI policy risks and uncertainties surrounding export controls made SK Hynix an attractive target for foreign investor selling, resulting in net foreign outflows exceeding 950 billion won on that particular trading day.

The broader KOSPI index declined by 5% due to losses across various tech sectors, while the Nasdaq 100 futures also saw a sharp decrease in Asian trade.