Samsung Electronics and SK Hynix stocks declined 7.9% and 10.1% respectively last week amid intensifying concerns over a memory chip industry 'peak-out,' with both stocks down 23.9% and 27.0% from recent highs. The decline was driven by concerns that the memory semiconductor cycle has passed its peak, compounded by global semiconductor stock sentiment deterioration and amplified losses from single-stock leveraged products. Market focus now turns to upcoming earnings reports from global semiconductor firms including Netherlands-based ASML on the 15th and Taiwan's TSMC on the 16th, as investors seek clarity on whether memory demand growth is genuinely slowing.
Samsung Electronics and SK Hynix Record Sharp Weekly Declines
According to the securities industry on the 13th, global semiconductor companies including Netherlands-based ASML, Taiwan's TSMC, and Seagate will sequentially release their second-quarter earnings starting on the 15th with ASML, followed by TSMC and Seagate on the 16th. Last week, Samsung Electronics and SK Hynix fell 7.9% and 10.1% week-over-week respectively, representing declines of 23.9% and 27.0% from their peak levels.
The stock declines occurred despite Samsung Electronics achieving a world-record operating profit and SK Hynix preparing for a major event with its US Nasdaq ADR listing. Kiwoom Securities downgraded Samsung Electronics' target price from 430,000 won to 390,000 won last week - the first downgrade since the Kospi rally began last year. Park Yu-ak, a Kiwoom Securities researcher, stated that "Samsung Electronics' stock price has shown an upward trend based on EPS growth, but in the second half when EPS growth rate significantly slows, volatility is expected to expand due to 'changes in the memory industry.'"
Apple Price Increases and Meta Cloud Rumors Fuel Peak-Out Concerns
The starting point of recent memory peak-out concerns was Apple's product price increase. Memory supply shortages drove prices sky-high, and Apple, unable to bear this 'chip inflation,' announced price increases for its products. Reports also emerged that Apple requested the US government for permission to import Chinese-made memory chips to resolve the memory supply shortage.
Meta's rumored entry into the AI cloud business also fueled peak-out concerns, as it was interpreted to mean Meta had over-built AI infrastructure and was monetizing excess resources through a new cloud business. These developments led to concerns that the memory super-cycle would fade as Big Tech companies that had aggressively expanded AI data centers would reduce capital expenditures or develop alternative technologies. However, the Meta-driven peak-out concerns were resolved after Meta signed long-term supply agreements (LTA) with Samsung Electronics and SanDisk.
Securities Firms Maintain Cautious Stance Ahead of Big Tech Earnings
The securities industry consensus remains that the semiconductor super-cycle is still in its early stages, with analyses suggesting that memory peak-out concerns are exaggerated and recent sharp declines were caused by supply-demand imbalances driven by foreign investor rebalancing and single-stock leverage. However, as seen with Samsung Electronics last week, semiconductor stock prices may not immediately react to this week's global semiconductor earnings reports. Market expectations have risen, and cross-verification with Big Tech earnings from Google, Microsoft, and Amazon scheduled for later this month is necessary.
Na Jeong-hwan, an NH Investment & Securities researcher, stated that "for a trend-based stock price re-rise, profit forecasts need to be revised upward and events supporting continued AI demand and Big Tech's capital expenditure (CAPEX) expansion are necessary," adding that "a meaningful rebound will appear after fund outflows due to price volatility unrelated to fundamentals are absorbed."
US Inflation Data and South Korea Rate Decision Scheduled This Week
Major interest rate-related events are also scheduled consecutively this week. From the 14th to 16th, the US Consumer Price Index (CPI), Producer Price Index (PPI), and retail sales will be announced. Park Ki-ryang, a Samsung Securities researcher, stated that "major inflation indicators to be released this week are expected to weaken upward interest rate pressure by increasing the possibility of peaking out with June as the peak, aided by the recent decline in oil prices."
On the 16th, the Bank of Korea will hold its July Monetary Policy Committee meeting to decide the base interest rate. As the Bank of Korea raising the base rate by 0.25 percentage points for the first time in 3 years and 6 months has become a foregone conclusion, interest is focused on whether additional rate increases will follow rather than the rate increase itself.
FAQ
What caused Samsung Electronics and SK Hynix stocks to fall last week?
Samsung Electronics and SK Hynix stocks fell 7.9% and 10.1% respectively last week due to intensifying concerns that the memory semiconductor cycle has passed its peak, combined with deteriorating global semiconductor stock sentiment and amplified losses from single-stock leveraged products.
When will TSMC and ASML announce their earnings?
ASML is scheduled to announce its second-quarter earnings on the 15th, while TSMC and Seagate will release their results on the 16th, according to the securities industry on the 13th.
What interest rate decision is the Bank of Korea expected to make on the 16th?
The Bank of Korea is widely expected to raise the base interest rate by 0.25 percentage points on the 16th during its July Monetary Policy Committee meeting, marking the first rate increase in 3 years and 6 months.
