According to the report by Morgan Stanley, South Korean semiconductor manufacturer SK Hynix's stock price plummeted on the Seoul Stock Exchange on Thursday (September 19), leading the decline in the semiconductor industry.

Morgan Stanley has recently downgraded SK Hynix's stock rating by two notches, from "shareholding" to "reducing shareholding", and has lowered the target stock price from 0.26 million won to 0.12 million won, citing the weakening pricing power of the company.

Morgan Stanley pointed out that among global memory chip manufacturers, the stock is currently the least favored.

As a result of this, the stock plummeted by 11% at one point on Thursday, reaching its lowest level since February 8th, before narrowing the decline to the current 7.8%. On the same day, other semiconductor stocks listed in Seoul were also affected. For example, Hanmi Semiconductor fell by 8.2% and Samsung Electronics fell by 3.4%.

Since the beginning of this year, SK Hynix's stock price has skyrocketed to a 24-year high in July due to a supply agreement with the leading AI company Nvidia. However, in the past two months, the stock price has experienced a significant decline amidst bearish sentiment. Nevertheless, the stock has still risen by over 2% this year, while Samsung has fallen by 21% during the same period.

Market participants are starting to worry about whether the profits brought by AI can be realized, and as a result, global technology stocks are facing a sell-off, with the impact on the South Korean stock market being particularly severe.

Morgan Stanley stated that in the recent AI frenzy, although people's expectations for AI and enterprise server-related products are still high, the market has underestimated the impact of excess inventory and overdelivery on the demand for memory chips.

Morgan Stanley analysts Shawn Kim and Duan Liu wrote in a report, 'The price situation is showing signs of deterioration for the first time in two years, with contract prices far below the manufacturer's quote. Simply put, business is not doing too well,' this is the sentiment of some major memory salespeople.

At the same time, they pointed out that, 'We are more inclined to improve quality in Samsung's products and value-oriented terminal markets. The situation for memory chips is starting to deteriorate, and from now on, as we move out of the late stage of the cycle, revenue growth and profit margins will become more challenging.'