Kioxia Shock and the Reality Check of the 2025 Semiconductor Market

On November 14, 2025, another ‘semiconductor shock’ hit the Asian stock market. This time, the epicenter was the Japanese NAND flash memory company, Kioxia Holdings. As soon as the company announced a 60% drop in net profit compared to the previous year, the entire Asian semiconductor market collapsed like dominoes. Notably, in South Korea’s KOSPI, foreign investors net sold SK Hynix shares worth 1.2578 trillion won and Samsung Electronics shares worth 589.4 billion won, shaking the market.

The name Kioxia might be unfamiliar to some, but it is a memory semiconductor specialist company that ranks second in the global NAND flash market. It was formed when Toshiba’s memory division was spun off, and in 2018, SK Hynix participated in a consortium led by Bain Capital, investing about 3.9 trillion won. Currently, SK Hynix holds approximately 19% of Kioxia’s shares, and including convertible bonds, it can secure an additional 14.4% stake.

Why did the poor performance of just one company, Kioxia, cause such a significant ripple effect? Personally, I believe this incident serves as a warning beyond a mere earnings announcement, highlighting the overheating of the current semiconductor market, particularly the AI-related semiconductor market. Kioxia’s stock had surged by a staggering 510% this year. However, the actual business performance fell short of expectations, reminding investors of concerns about an ‘AI bubble’.

What is particularly noteworthy is the difference in business models between Kioxia and South Korean memory semiconductor companies. While Samsung Electronics and SK Hynix are comprehensive memory companies producing both DRAM and NAND flash, Kioxia specializes solely in NAND flash. More importantly, there is a difference in product portfolios. With the recent explosive increase in data center demand, the enterprise solid-state drive (eSSD) market is rapidly growing. Kioxia is known to have a higher proportion of sales in general mobile products rather than these high-value-added products.

Due to these structural differences, industry experts analyze that Kioxia’s poor performance does not signify a bubble in the overall memory market. In fact, as of 2025, the eSSD market is showing an annual growth rate of over 30% alongside the AI data center construction boom. Samsung Electronics reported that its eSSD sales increased by more than 50% year-on-year in the third quarter, and SK Hynix achieved record-breaking performance with HBM (high bandwidth memory) sales accounting for over 30% of total sales.

AI Stock Correction in the U.S. and Chain Reaction in the Asian Market

However, the background to Kioxia Shock’s significant impact lies in the controversy over the overvaluation of AI-related stocks in the U.S. market. Following Kioxia’s earnings announcement, NVIDIA fell by 3.58%, AMD by 5.67%, and Palantir by 6.53%, while the Philadelphia Semiconductor Index dropped by 3.72%. This adjustment in the U.S. market was directly transferred to the Asian market upon opening.

Upon reflection, this pattern has been repeating throughout 2025. With the valuations of AI-related stocks being extremely high, even minor negative news leads to significant corrections. NVIDIA’s current PER exceeds 60 times, and AMD maintains a high valuation of over 40 times. In such a situation, if actual demand or performance falls even slightly short of expectations, it is natural for stock prices to fluctuate significantly.

The Asian market’s more sensitive reaction is primarily because most Asian semiconductor companies are deeply embedded in the supply chains of major U.S. tech companies. Samsung Electronics and SK Hynix supply memory semiconductors to NVIDIA, AMD, Intel, and Taiwan’s TSMC is their key foundry partner. Therefore, concerns about the U.S. AI market naturally lead to a decline in the stock prices of Asian suppliers.

On this day, the total net selling by foreigners on the KOSPI amounted to 2.3667 trillion won, with most of it concentrated in the semiconductor and AI value chain. In the case of SK Hynix, it recorded a massive net sale of 1.2578 trillion won in just one day, which appears to be the result of both the direct impact of holding Kioxia shares and overall concerns about the memory market.

‘Everything Panic’ Phenomenon in the Financial Market

What is more concerning about this situation is the ‘everything panic’ phenomenon, where not only the stock market but also the bond and foreign exchange markets plummeted simultaneously. The yield on three-year government bonds rose by 0.012 percentage points to 2.944%, hitting a yearly high, and the 10-year yield climbed to 3.317%, surpassing the previous high recorded on the 12th. Notably, the three-year yield rose to the 2.99% range during the day, threatening the 3% mark.

Foreigners also led the rise in interest rates by net selling 7,467 contracts of three-year government bond futures and 1,440 contracts of 10-year futures in the bond futures market. This is interpreted as a movement to withdraw funds from the entire Korean market, rather than simply fleeing to bonds from stocks. Although the government attempted to curb the rise in interest rates through verbal intervention, it does not seem to be a fundamental solution.

The weakness of the won is also at a serious level. The won-dollar exchange rate fell to 1,474.9 won at the opening, then surged by more than 20 won during the day due to verbal intervention by foreign exchange authorities, showing extreme volatility. Deputy Prime Minister for Economic Affairs Koo Yoon-cheol’s statement that “we will closely discuss with the National Pension Service and export companies to devise measures to stabilize the exchange rate” also drew attention, suggesting policy intervention amid the absence of typical dollar selling by export companies.

Interestingly, recent analyses suggest that export companies are holding onto dollars instead of converting them to won, citing preparations for investments in the U.S. This seems to be a preemptive measure by Korean companies in response to increased pressure for manufacturing investment expansion in the U.S. following Trump’s re-election, which is adding short-term pressure on the won.

Banks are also reportedly issuing a large number of bank bonds to defend liquidity. The net issuance of bank bonds in the third quarter of 2025 surged to 11.8092 trillion won compared to the first quarter, with 8.6036 trillion won already net issued in October and November alone. This accounts for 31% of the total bond issuance market size. With the increased cost of foreign currency procurement due to the weak won, banks are facing increased pressure on their liquidity ratios and BIS capital adequacy ratios.

Personally, I think this ‘everything panic’ phenomenon is too widespread to be explained solely by the poor performance of one company, Kioxia. Rather, it seems that multiple factors, such as global liquidity contraction, expectations of rising U.S. interest rates, and geopolitical risks, are acting in combination, with the Kioxia incident serving as a trigger. Especially in the second half of 2025, as uncertainty about changes in the U.S. Federal Reserve’s monetary policy grows, the pressure for capital outflow from emerging markets is continuing.

However, as pointed out by LS Securities researcher Hwang San-hae, it is also important to consider that the economic cycles of the U.S. and South Korea are different. While the U.S. is experiencing a deteriorating economic outlook, South Korea is in a recovery trend, which could work in favor of the Korean market in the medium to long term. However, in the short term, global risk aversion is expected to persist, leading to high volatility, and in such a situation, market sentiment rather than individual company fundamentals is likely to drive stock prices.

Ultimately, the Kioxia Shock can be seen as a symbolic event that reveals the current state of the 2025 semiconductor market. The gap between excessive expectations and high valuations due to the AI boom and actual business performance is widening, exposing the structural vulnerability where the entire market is significantly shaken by minor negative news. This volatility is expected to continue for the next few months, and it seems to be a time when investors should pay more attention to the actual competitiveness and long-term growth potential of individual companies.

This article was written after reading a Maeil Business Newspaper article, with personal opinions and analysis added.

Disclaimer: This blog is not a news outlet, and the content written reflects the author’s personal views. Responsibility for investment decisions lies with the investor, and no responsibility is taken for investment losses based on the content of this article.