Samsung Electronics' better-than-expected earnings and SK Hynix's successful debut on the U.S. stock market could not prevent a sharp decline in their stock prices. Reuters, AP, The Wall Street Journal (WSJ), and the Financial Times (FT) identified concerns over slowing memory price increases, uncertainties regarding high-bandwidth memory (HBM)4 shipments, and tensions in the Middle East as major risks.
According to AP, on the afternoon of July 13, SK Hynix's stock fell by 10.6%, while Samsung Electronics dropped by 6.7%. The KOSPI index also declined by 5.6%. Following a recent surge in semiconductor stocks, profit-taking occurred amid escalating tensions between the U.S. and Iran.
The first warning highlighted by foreign media is the slowdown in profit growth. Reuters noted, "Samsung's operating profit for the second quarter was expected to increase nearly 19 times compared to the same period last year, but it did not meet investors' high expectations." The market is currently more sensitive to the possibility of slower growth in the second half than to current performance.
Memory supply remains tight, and both DRAM and NAND prices are expected to remain strong for the time being. However, Reuters reported that "as prices for PC and smartphone components rise, customers are becoming cautious about additional purchases."
Views among analysts are mixed. JP Morgan, cited by Reuters, predicted that "memory prices will support second-half performance as supply fails to keep up with demand." In contrast, Kiwoom Securities lowered its target price for Samsung Electronics by about 9%, citing increased price burdens on customers.
The second warning involves the selling pressure following SK Hynix's American Depositary Receipt (ADR) listing. ADRs are securities that allow foreign company stocks to be bought and sold on U.S. exchanges. SK Hynix's ADR finished its first day on Nasdaq on July 10 at a price 12.8% higher than the offering price.
However, there is a growing perception that the expectations for the listing have already been factored into the stock price. Reuters analyzed that "as the entry into the U.S. market was completed, investors began to sell their previously rising stocks to realize profits."
HBM4 supply has also emerged as a variable. The market expected a significant increase in shipments starting in the second quarter. However, Reuters reported that "the increase in shipments was not as large as anticipated, leading to a downgrade in SK Hynix's earnings outlook."
The third warning pertains to the geopolitical situation in the Middle East and the burden of AI spending. AP reported that "as the U.S. and Iran exchanged airstrikes again, Brent crude oil rose by about 4%, and Asian markets showed widespread weakness." The rise in oil prices raises concerns about inflation and the potential for prolonged high interest rates, which weighed on the market.
The significant market share of Samsung Electronics and SK Hynix in the KOSPI index also amplified the impact of the declines. WSJ noted that "the recent drop in the KOSPI has been heavily influenced by profit-taking in these two semiconductor stocks, which have a high index weight."
FT also identified the high valuations of AI semiconductor stocks and the concentration of funds in specific stocks as risk factors. Major Asian semiconductor companies, including Samsung Electronics and SK Hynix, have surged in a short period, prompting some global asset managers to reduce their investment proportions.
Future stock prices will also be influenced by AI spending from major U.S. tech companies. AP reported that "there are growing doubts about whether the massive funds invested globally in semiconductors and data centers will yield corresponding productivity and profits."
Foreign media do not view this sharp decline as a signal of the end of the semiconductor boom. They expect that the ongoing memory supply shortage and demand for AI data centers will continue to support the profits of both companies for the time being. However, WSJ and FT cautioned that "given the recent historic surge and increased valuations, significant fluctuations may occur."
Ultimately, the potential for a rebound will depend on third-quarter memory prices, HBM4 supply levels, and the AI spending plans of major U.S. tech companies. Additionally, if tensions surrounding the Strait of Hormuz persist, domestic semiconductor stocks may experience significant volatility for the foreseeable future.
* This article has been translated by AI.
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