The Huawei sanctions evasion scandal disrupted the growth of SK

The Huawei sanctions evasion scandal disrupted the growth of SK Hynix shares

Discovered in the latest smartphone from the US-sanctioned Huawei company, the branded memory SK Hynix appeared there against the will of the South Korean manufacturer, but this fact alone interrupted the growth of the company’s share price, which had risen by 60% since the beginning of the year due to the Investors’ enthusiasm for ideas for the widespread dissemination of artificial intelligence technologies.

    Image source: SK hynix

Image source: SK hynix

As you know, until recently SK Hynix was the only provider of HBM3 memory for NVIDIA computing accelerators, the demand for which, according to TSMC management, has tripled this year. Investors rightly assumed that SK Hynix would get some of NVIDIA’s welcoming table. It was recently announced that Samsung Electronics will also be among the HBM3 suppliers for the latter company’s needs in October.

However, the correction in SK hynix’s share price was caused by the scandal surrounding the Huawei Mate 60 Pro smartphone, in which memories of this Korean brand were discovered, although such collaboration between manufacturers has been prohibited by US export control regulations since 2019. Officially, SK hynix claims to be in full compliance with the requirements of US law, and Huawei stopped providing its storage as soon as the corresponding restrictions appeared.

As Bloomberg explains, SK hynix shares have lost 6% since last Thursday as the Huawei scandal made investors somewhat wary. The situation was aggravated by the Chinese authorities’ intention to ban the use of the Apple iPhone by officials and employees of companies with state participation. This will affect the demand for new Apple smartphones and also reduce the supply of SK Hynix memory for this smartphone manufacturer’s needs. The Korean memory maker will report its quarterly results next month, and some experts expect them to be worse than expected.

In the previous quarter, SK hynix’s sales fell by half compared to the previous year; The company has already suffered operating losses for three quarters in a row. Now the conditions for a noticeable improvement in demand for memory chips on the market are simply missing. All of this caused investors who had previously invested in SK hynix shares to take profits.


About the author

Dylan Harris

Dylan Harris is fascinated by tests and reviews of computer hardware.

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