Samsung Electronics and SK Hynix, two major semiconductor companies in South Korea, experienced a sharp decline in their stock prices on October 30. This drop is attributed to a downturn in U.S. tech stocks, including Alphabet, Google's parent company, which raised concerns about AI-related investments.
According to the Korea Exchange, as of 9:38 a.m. on October 30, Samsung Electronics' stock was trading at 222,500 won, down 9,500 won (4.09%) from the previous trading day. The preferred shares of Samsung Electronics also fell by 4.89%, reaching 174,900 won.
SK Hynix, which had shown resilience the previous day, saw its stock plummet by 11,200 won (7.34%), trading at 1,414,000 won. Other related stocks, including SK Square (-6.09%), Samsung Life (-4.68%), and Samsung C&T (-4.02%), also faced declines.
The drop in semiconductor stocks is linked to the significant decline in U.S. tech stocks and renewed concerns about the profitability of AI investments. On October 29, Alphabet's stock fell by 12.64% due to disappointing earnings and worries about deteriorating free cash flow from expanded AI investments.
Sell-offs spread to semiconductor stocks as well, with Micron Technology down 4.98%, AMD down 2.08%, and SK Hynix's American Depositary Receipts (ADRs) falling by 1.58%. The Philadelphia Semiconductor Index also dropped by 1.42%.
Additionally, after the U.S. market closed, Intel and Amazon released disappointing earnings forecasts, further dampening investor sentiment. Intel's stock fell by over 20% in after-hours trading due to weak revenue projections for the next quarter.
Despite the short-term stock adjustments, analysts maintain that the growth trajectory of domestic semiconductor companies remains strong. Shinhan Investment Corp. reiterated its 'Buy' rating for Samsung Electronics, maintaining a target price of 450,000 won. The firm highlighted the potential for long-term performance improvements due to increased supply of high-bandwidth memory (HBM) and long-term supply agreements (LTAs).
Kim Hyung-tae, a researcher at Shinhan Investment Corp., noted, "While the absence of additional shareholder returns beyond the special dividend of 30 trillion won is disappointing, we expect to see a consistent and sustainable shareholder return policy starting in the first quarter of next year." He also adjusted the earnings estimates for the fourth quarter of this year and next year upward, citing the anticipated expansion of HBM4 shipments and the ongoing memory supply shortage. He projected that the imbalance in memory supply and demand would continue until 2028, leading to a reevaluation of Samsung Electronics' corporate value due to the expansion of long-term supply contracts.
* This article has been translated by AI.
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