What Happened?
A number of stocks fell in the afternoon session after a former Samsung executive warned of a potential downturn in memory chip prices due to expanding production capacity in China.
A warning from Kyung Kye-hyun, a former head of Samsung's semiconductor business, cast a shadow over the long-term outlook for memory chips. He predicted that current AI-driven "super cycle" could lose momentum by 2028. The primary concern was the aggressive expansion of manufacturing capacity by Chinese chipmakers.
This rapid increase in production threatened to create a supply glut, which could lead to a significant drop in memory chip prices in the coming years. This potential challenge to profitability raised concern among investors in the memory and data storage segments.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Memory Semiconductors company Seagate (NASDAQ: STX) fell 2.9%. Is now the time to buy Seagate? Access our full analysis report here, it’s free.
- Memory Semiconductors company Western Digital (NASDAQ: WDC) fell 2.6%. Is now the time to buy Western Digital? Access our full analysis report here, it’s free.
Zooming In On Seagate (STX)
Seagate’s shares are extremely volatile and have had 46 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was about 21 hours ago when the stock dropped 8.3% as a broad-based sell-off hit the semiconductor sector following news of a potential strike at Samsung and a stake sale by Taiwan Semiconductor Manufacturing (TSMC), which rattled global chip supply chains.
These events highlighted significant supply-chain risks, triggering a sharp reversal across the chip industry. Adding to the sector's weakness were rising valuation concerns, inflation fears, and broader market jitters that led to renewed selling pressure on major companies like NVIDIA, Intel, and Micron Technology.
Furthermore, ongoing supply constraints for rare earth materials, which are used in semiconductor manufacturing, reportedly caused delays and higher input costs for firms in the sector, compounding the negative sentiment for chip-related stocks.
Seagate is up 152% since the beginning of the year, but at $723.05 per share, it is still trading 13.3% below its 52-week high of $834.01 from May 2026. Investors who bought $1,000 worth of Seagate’s shares 5 years ago would now be looking at an investment worth $7,264.
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