Shares of Montage Technology (MONTAGE TECH) (ASX: 06809) are down nearly 12% in Hong Kong trading following news of a South Korean investigation into alleged semiconductor component price manipulation.

The stock fell 11.89% to HK$318.6, with a trading volume of HK$940 million. Reports indicate that on July 15, South Korean prosecutors conducted surprise raids on the local offices of three semiconductor companies, including Montage Technology, as part of the probe.

In a response to media inquiries, the company's board office stated that the incident occurred recently and the firm is currently gathering information. Montage Technology emphasized its commitment to compliant operations and stated it will cooperate fully with the investigation, adding that its current operations are normal.

The news comes amid a sharp sell-off in the memory chip sector. Overnight, U.S. stocks including SanDisk and Micron Technology plunged more than 8%, while SK Hynix fell over 9%. In South Korean trading today, shares of SK Hynix and Samsung Electronics also experienced significant declines.

Despite the recent volatility, analysts from Bank of Communications International maintain that the memory market remains undersupplied, a condition they expect to persist at least until the fourth quarter of 2027. They further suggest that any potential price correction in 2028 is likely to be more moderate compared to previous industry cycles.