Samsung Securities analyst Lee Jong-wook stated on the 18th that the semiconductor cycle has not ended despite significant stock price volatility in Samsung Electronics and SK Hynix. This analysis followed double-digit percentage drops on the 13th, when SK Hynix fell 15.4% - its largest single-day decline in 17 years since the 2008 global financial crisis - while Samsung Electronics dropped 10.7%. Lee attributed the volatility to SK Hynix ADR delinking from domestic shares, leverage ETF effects, Middle East war risk aversion, and concerns over SK Hynix's Q2 earnings, but emphasized these represent market structure-derived volatility rather than signals of deteriorating memory chip industry fundamentals.
SK Hynix Records 17-Year Largest Single-Day Drop on the 13th
On the 13th, SK Hynix recorded a 15.4% decline, marking its largest single-day drop since October 2008 during the global financial crisis. Samsung Electronics fell 10.7%, Samsung Electro-Mechanics dropped 18.6%, and LG Innotek declined 11.3% on the same day. Samsung Securities identified that SK Hynix's stock price delinked from its New York-listed ADR, triggering material-exhaustion selling, with intraday losses expanding and causing panic selling. The firm also noted that Samsung Electronics and SK Hynix leverage ETFs amplified volatility. Lee stated, "This is volatility derived from market structure, not a signal representing the memory chip industry itself. Volatility expansion cannot change the relationship between the semiconductor cycle and stock prices."
Meta Expands Louisiana Datacenter Investment to Over $50 Billion
Samsung Securities emphasized that no signals of AI infrastructure investment contraction have appeared despite the stock price declines. The firm cited Meta's announcement on the 13th - the same day Korean semiconductor stocks plunged - that the company expanded its Louisiana Hyperion datacenter investment from the existing $27 billion to over $50 billion. Lee stated, "AI infrastructure investment shows no signs of weakening."
Micron Announces $250 Billion US Investment Through 2035
Long-term semiconductor investment trends remain intact according to Samsung Securities. Micron announced on the 9th a total $250 billion investment in the United States through 2035, with plans to handle 40% of its DRAM production in the US within the next 10 years. Intel also announced $5.7 billion in AI-focused capital investment in Ireland and other locations. Lee noted, "Alphabet's paid-in capital increase saw excess demand, and Berkshire Hathaway invested $10 billion, showing market confidence is maintained from a funding perspective. We judge that hints about next year's CAPEX shown in hyperscalers' earnings to be announced at the end of this month will be the solution to this adjustment."
Samsung Electronics PBR Reaches 1.78x as of the 13th
Samsung Securities identified the start of new fab operations as the critical inflection point for the memory stock price cycle. Lee stated, "Fab operations themselves do not immediately lead to oversupply, but the corporate value during periods when shortage resolution possibility is low differs from periods requiring supply-demand balancing. For this cycle, we judge a rally phase is likely before Q2 next year when memory companies' meaningful supply expansion begins, followed by a sideways phase afterward." As of the 13th, Samsung Electronics' price-to-book ratio stood at 1.78x and SK Hynix at 2.45x, already reaching lower-bound levels according to the analyst. Lee stated, "As long as investors believe in the AI cycle, we believe the lower bound will hold, and from this perspective, we judge the stock price adjustment is at its tail end."
FAQ
What caused SK Hynix's 15.4% drop on the 13th?
Samsung Securities identified multiple factors: SK Hynix's stock price delinked from its New York-listed ADR, triggering material-exhaustion selling and panic selling as intraday losses expanded. Additional factors included Middle East war risk aversion and concerns over SK Hynix's Q2 earnings. Samsung Electronics and SK Hynix leverage ETFs also amplified volatility.
What is Samsung Securities' outlook on the semiconductor cycle?
Samsung Securities analyst Lee Jong-wook stated on the 18th that the semiconductor cycle has not ended despite the volatility. The firm emphasized that AI infrastructure investment shows no signs of weakening, citing Meta's expansion of its Louisiana datacenter investment to over $50 billion on the 13th. Lee identified the start of new fab operations in Q2 next year as the critical inflection point, with a rally phase likely before then and a sideways phase afterward.
