Kospi’s bear rally came to a stop as skepticism over the outlook for South Korea’s memory giants Samsung Electronics Co. and SK hynix Inc. elevated from poorer-than-expected earnings results from U.S. chipmaker Nvidia.

Shares of Samsung Electronics were trading 2.17 percent down at 58,700 won ($44.8) on Wednesday morning from Tuesday’s closing of 60,000 won. The stock finished 1.32 percent lower Tuesday as foreign investors shed 229 billion won.

Shares of SK hynix were also trading 3.15 percent lower at 92,100 won on Wednesday morning, extending losses after finishing 1.25 percent lower at 95,100 won Tuesday. SK hynix shares have been boxed at 86,000 won-100,000 won.

The main Kospi traded 0.8 percent lower at 2,483.48 Wednesday morning.

Doubts over the world’s two leading DRAM makers have been rising from continued fall in DRAM prices.

They were aggravated after Nvidia on Monday reported weaker-than-expected preliminary revenue of $6.7 billion for the second quarter, sharply below initial outlook of $8.1 billion. The chipmaker particularly forecast weak gaming revenue – 33 percent down from last year – due to “lower sell-in of gaming products reflecting a reduction in channel partner sales likely due to macroeconomic headwinds.”

Nvidia’s data center segment also reported $3.81 billion in preliminary revenue for the second quarter, up 1 percent on quarter and 61 percent on year but 5 percent below market expectations.

The weak results of its data center business that had expected to maintain high growth based on solid demand are raising concerns about an overall slowdown in IT demand.

Brokerages had so far projected strong data center demand to sustain chip earnings and stocks.

A down cycle is forecast for Samsung Electronics and SK hynix as prices of DRAM and NAND flash continue to fall.

According to DRAMeXchange, average fixed price of DRAM for PCs (DDR4 8Gb) was $2.88 in July, down 14 percent from a month ago. The price of NAND flash (128 Gb 16Gx8 MLC) also dropped 3.8 percent on month to $4.49 in July.

Taiwanese market researcher TrendForce warned that DRAM demand growth may reach record low level next year, which would hit hard on Samsung Electronics and SK hynix largely dependent on mass-market memory chips for revenue.

Kiwoom Securities projected Samsung Electronics to raise 49.4 trillion won in operating income next year, down 7.2 percent from its estimate for this year. SK hynix’s operating income for next year is also projected 22.6 percent lower at 9.5 trillion won.

“There are concerns about a decline in server demand in the fourth quarter amid a sharp fall in mobile demand,” said Park Yoo-ak, a researcher at Kiwoom Securities.

By Cha Chang-hee and Lee Eun-joo

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