South Korean Semiconductor Giants See Stock Surge

Shares of South Korean semiconductor giants Samsung Electronics and SK hynix have surged significantly, thanks to the strong earnings reported by U.S. chipmaker Micron. This comes as a relief to the sector, which had been weighed down by concerns over a potential 'semiconductor downcycle' and oversupply of memory chips, particularly high-bandwidth memory (HBM).

According to the Korea Exchange on September 26, Samsung Electronics' shares on the KOSPI market increased by 4.34 percent, or 2,700 won ($2.03), reaching 64,900 won as of 9:21 a.m. This rebound follows a 52-week low of 62,200 won the previous day. Similarly, SK hynix's stock price surged 8.11 percent, or 13,400 won, to 178,700 won, while Hanmi Semiconductor rose 6.94 percent, or 7,400 won, to 114,000 won.

Micron's fourth-quarter fiscal 2024 earnings, reported on September 25, showed revenue of $7.75 billion, surpassing Wall Street's forecast of $7.65 billion by 1.31 percent. The company's forward guidance also exceeded expectations, projecting revenue for the first quarter of fiscal 2025 between $8.5 billion and $8.9 billion, surpassing Wall Street's low-end estimate of $8.35 billion.

Micron CEO Sanjay Mehrotra addressed concerns about a potential oversupply of major memory chips, including HBM, stating that all planned HBM production for this year and next has already been sold. This strong demand driven by advancements in the AI industry has led to a supply shortage.

Despite Morgan Stanley's warnings of a 'semiconductor winter,' analysts believe Micron's strong results will positively impact the stock prices of Samsung Electronics and SK hynix, the world's top two memory chipmakers. However, South Korean brokerage firms remain mixed in their outlook for these companies as the third-quarter earnings season approaches.

Samsung Electronics faces a critical juncture with its third-quarter provisional earnings report, scheduled for the second week of October. Securities firms have been revising down their earnings forecasts for the company. In contrast, the outlook for SK hynix is more positive, with domestic securities firms maintaining relatively stable expectations for the company.

Some analysts note that there is still time before the memory cycle reaches its peak, and both SK hynix and Samsung Electronics are expected to benefit from a stock price recovery when the upward cycle resumes in the second half of next year.