South Korean memory chip maker SK Hynix is under heavy pressure as its market value has lost about US$470 billion in just over a month.
Its share price has also plunged about 38% from its high in June.
The fall comes despite the company still expecting to record its highest quarterly profit in history thanks to strong demand for artificial intelligence (AI) chips.
Investors are now worried that the rising cost of memory chips will cause technology companies to cut back on purchases or seek lower-priced suppliers.
The concerns come as tech giants continue to increase investment in AI, while at the same time trying to control operating costs.
Market attention is also now focused on the financial results of several major technology companies such as Meta and Samsung Electronics.
Investors are keen to see whether these companies will continue to increase spending on AI or start to slow down.
The development is important because it will determine future demand for memory chips.
Despite SK Hynix's share price falling, many analysts still see the company as having strong business fundamentals.
SK Hynix remains a leader in the production of High Bandwidth Memory (HBM) chips used to train and run AI systems.
In fact, the company's stock valuation is now cheaper than its peers, attracting some long-term investors.
Analysts expect SK Hynix to report sales of around US$57 billion for the second quarter of this year, more than triple the same period last year.
However, the market is not only evaluating the company's financial performance, but also wants to see the prospects for future AI demand.
If the growth of AI investment begins to slow, shares of related companies such as SK Hynix are at risk of further significant volatility.
