TLDR
- Google introduced TurboQuant, a breakthrough algorithm capable of reducing AI memory needs by as much as six times
- Samsung experienced a 4.8% decline while SK Hynix dropped 6.23% following the announcement
- American memory chip manufacturers Micron, SanDisk, and Western Digital saw losses ranging from 1.6% to 3.5%
- Industry experts characterize the decline as temporary profit-taking rather than indication of weakening long-term demand
- TurboQuant’s official presentation is scheduled for the ICLR 2026 conference in April
Shares of Samsung and SK Hynix experienced significant declines on Thursday following the announcement of TurboQuant, Google’s innovative AI memory compression technology.
Samsung’s stock declined 4.8% while SK Hynix saw a more substantial 6.23% drop on the Korea Exchange. The two companies emerged as the primary contributors to the KOSPI index’s losses, which reached as high as 3% during Thursday’s trading session.
The broader electrical and electronics sector index experienced a 4.76% decline, settling at 3,592.22 points.
The downturn came after overnight weakness in American memory chip stocks. Micron Technology fell 3.40%, SanDisk declined 3.50%, and Western Digital decreased 1.63% on the New York Stock Exchange.
Google’s research team revealed TurboQuant at the beginning of this week. The innovative algorithm enables AI models to manage up to six times greater capacity while utilizing identical memory resources.
According to Google, the technology also enhances vector search functionality that drives leading search engines.
Market participants expressed concerns that reduced memory requirements might diminish demand for the sophisticated memory chips that Samsung and SK Hynix provide to data center operators.
Both manufacturers have experienced substantial benefits from AI-fueled demand. This surge in demand had been anticipated to create memory chip supply constraints in recent quarters and propelled significant stock price increases for both companies.
Industry Analysts Challenge Bearish Interpretation
Most financial institutions interpret the decline as temporary profit-taking activity. Market analysts contend the technology may actually bolster memory demand in the long run.
Surim Lee, an equity research analyst with DS Investment & Securities, explained that technologies designed to reduce memory consumption typically expand overall demand rather than diminish it. Lee highlighted that TurboQuant’s development stemmed from memory constraints in AI infrastructure reaching critical thresholds.
Lee further noted that efficiency improvements create a cyclical pattern where cost reductions drive increased utilization and capital reinvestment, rather than decreasing aggregate demand.
Han Ji-young from Kiwoom Securities observed that as AI models gain efficiency and capability, overall AI adoption could ironically accelerate.
Han suggested the pronounced stock decline likely reflected investor exhaustion following the early-year memory price surge, with the TurboQuant announcement providing justification for profit realization.
Past Trends Reinforce Optimistic Outlook
Throughout history, innovations that enhance resource efficiency have frequently resulted in accelerated industry expansion and elevated total demand, rather than contraction.
Heo Jae-hwan from Eugene Investment & Securities indicated that server and semiconductor sectors connected to AI, where supply constraints already exist, are positioned to demonstrate greater resilience compared to other industries.
Google announced it will officially unveil TurboQuant at the ICLR 2026 conference scheduled for April.
Samsung and SK Hynix concluded trading at 1,801,000 won and 9,330,000 won respectively on the Korea Exchange on March 26.
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