China's CXMT listing and developments in DUV lithography equipment have contributed to a sharp decline in South Korean semiconductor stocks, but experts say the threat to Samsung Electronics and SK Hynix is not immediate. However, China's aggressive pricing strategy in general memory products is expected to pose a long-term challenge.
Jun Byung-seo, director of the China Economic and Financial Research Institute, stated in a phone interview with Aju Economy that the South Korean stock market has reacted excessively to news from China.
"The stock prices have plummeted, leading to an exaggerated interpretation of CXMT and Chinese semiconductor technology," he said. He noted that while CXMT is expanding its business primarily in general DRAM, Samsung and SK Hynix are rapidly increasing their supply of high-bandwidth memory (HBM) for AI servers, indicating that their main customer bases do not directly overlap.
Jun also assessed the short-term impact of Chinese DUV lithography equipment on the domestic semiconductor industry as limited, citing a significant gap between prototype development and establishing a stable production system.
Having previously served as an IT analyst at Daewoo Securities (now Mirae Asset Securities), Jun predicted, "China's DUV lithography equipment is still in the prototype stage, and it may take about a year to secure stability and yield in the actual production process before entering full-scale production."
He cautioned against simplistic comparisons regarding the technological gap between Chinese memory companies like CXMT and NAND flash producer YMTC and their South Korean counterparts, Samsung and SK Hynix, which he assessed to be around three to four years. "Saying that the technology gap between Chinese and Korean semiconductor companies is a few years is akin to asking who is taller between Americans and Koreans," he remarked, emphasizing that technology levels, yields, and production capacities vary significantly across different product categories such as DRAM, NAND, and HBM.
Jun identified the biggest threat to the Chinese semiconductor industry as the low-cost assault on general products. With support from the Chinese government, CXMT's rapid expansion of production capacity could pressure general DRAM prices and the profitability of global memory companies.
Regarding South Korea's response, he emphasized that securing corporate technological competitiveness is more crucial than government policy. "The response to China's semiconductor self-sufficiency policy depends more on the competitiveness of individual companies than on our government's strategy," he said, adding that it is vital for Samsung and SK Hynix to develop more advanced technologies and maintain a gap that is difficult for Chinese companies to close.
For individual investors exposed to rapid volatility, Jun advised against making abrupt decisions, suggesting a strategy of gradual buying. He stated, "Whether to view the semiconductor stock adjustment as a buying opportunity or to prepare for further declines is up to the investor's judgment," but noted that in a situation of high uncertainty, it is preferable to adhere to principles of gradual buying and selling while observing the market.
On July 28, the South Korean stock market saw a significant sell-off, particularly in semiconductor stocks. The KOSPI closed down 732.09 points (10.84%) at 6023.66, while the KOSDAQ index fell 59.01 points (7.72%) to finish at 705.85.
Samsung Electronics and SK Hynix led the decline, falling 13.39% and 14.65%, respectively. As the losses accelerated, circuit breakers were triggered in both the KOSDAQ and KOSPI markets, with the KOSPI dipping below the 6000 mark during trading.
* This article has been translated by AI.
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