Samsung, SK Hynix Slide as Chip Peak Fears Grip Seoul; Brokers Call Pullback a Buying Chance

A sharp selloff in Samsung Electronics Co. and SK Hynix Inc. is spreading fears across South Korea’s stock market that the semiconductor cycle may be nearing a peak. The two stocks, which have led the Kospi, also hammered investors in single-stock leveraged exchange-traded funds, with some products losing about 20% in a single day. Even as concerns build over a slowdown in the artificial-intelligence investment cycle and a possible peak in the memory market, brokerages say the move looks more like a short-term correction after a steep rally.

ETF Investors Rattled by Samsung, SK Hynix Drop

Samsung Electronics fell 10.18% from the previous session to close at 295,500 won on June 8, slipping below the 300,000-won mark for the first time in six trading days. The stock has declined for three straight sessions since June 4, losing 18% over that period. SK Hynix dropped 7.68% to 1,911,000 won, ending below 2 million won on a closing basis for the first time in nine trading days. The stock has fallen for four straight sessions since June 2, shedding 19% over that span. The slide in the two market heavyweights also shook the broader market, with the Kospi at one point down more than 8% intraday before closing at 7,484.41.

The selloff was sparked in the US. Broadcom’s earnings release late last week included an outlook for future AI chip revenue that fell short of market expectations, dampening investor sentiment. Strong US employment data also revived concerns about higher interest rates. Market participants say the Philadelphia Semiconductor Index’s 10.26% plunge added to the pressure on South Korean chip shares.

The drop left investors who bought related ETFs near recent highs nursing steep losses. The damage was especially severe for holders of single-stock leveraged products. Five leveraged ETFs tracking twice Samsung Electronics’ daily return each posted losses of around 20% on June 8. Five ETFs tied to twice SK Hynix’s daily return tumbled about 16%.

Retail investors are poised to bear much of the pain. Among the ETFs most heavily bought by individual investors over the past week, single-stock leveraged products ranked first through fourth. Investors bought 1.1611 trillion won of the top-ranked KODEX Samsung Electronics Single Stock Leverage ETF, followed by the TIGER Samsung Electronics Single Stock Leverage ETF with 829.3 billion won, the KODEX SK Hynix Single Stock Leverage ETF with 743.3 billion won, and the TIGER SK Hynix Single Stock Leverage ETF with 629.6 billion won.

The losses were not limited to single-stock products. Investors in broader ETFs were also exposed because the domestic market had become heavily concentrated in Samsung Electronics and SK Hynix. According to ETF Check, an ETF data platform run by Koscom, 229 domestic ETFs held Samsung Electronics as of June 8, with estimated holdings worth 51.0554 trillion won. Another 213 ETFs held SK Hynix, with estimated holdings of 46.2661 trillion won. Given that net assets in South Korea’s ETF market total about 500 trillion won, the two stocks alone accounted for nearly one-fifth of all ETF holdings, at 97.3215 trillion won.

Brokers See Short-Term Correction, Not Industry Downturn

The recent weakness in South Korea’s large-cap chip stocks has stirred concern that a full-fledged peak-out may be starting in the semiconductor cycle. Brokerages see it differently. Given recent earnings momentum and the direction of AI investment, they argue it is too early to conclude that the chip cycle has turned. Instead, the retreat appears to reflect profit-taking after a powerful run-up in share prices.

Han Ji-young, an analyst at Kiwoom Securities, said the recent plunge in US semiconductor shares is difficult to view as a result of worsening industry fundamentals such as a peak in the memory upcycle or slowing AI demand. Rather, fatigue had built up after a surge in prices and crowding in the sector, while rising US market rates after an employment surprise provided a rationale for a correction that cooled overheating.

Kim Joong-won, an analyst at Hyundai Motor Securities, also viewed the decline as a reset in short-term expectations rather than the end of the AI investment cycle. Concerns over slowing growth in AI investment and repeated profit-taking in semiconductor names have increased short-term volatility in large-cap growth stocks centered on chips, he said. But expectations remain intact for the buildout of the HBM4, or sixth-generation high-bandwidth memory, supply chain and for shipments of next-generation high-performance graphics processing units.

Some analysts also interpret the strong US jobs report as evidence that demand for AI data centers remains solid. Kim Ji-hyun, an analyst at Daol Investment & Securities, highlighted an increase of 11,000 jobs in specialty trade contractors within nonresidential construction in the latest US employment report. Electricians account for the largest share of that category. Given the recent outsized increase in data-center construction, she said, that suggests AI investment remains active.

SK Securities said the share-price correction presents a buying opportunity and maintained its target prices at 610,000 won for Samsung Electronics and 4 million won for SK Hynix. Han Dong-hee, an analyst at SK Securities, said the structural bottleneck in memory in the AI era, the sector’s rising importance and strong earnings at memory makers are not factors that change in the short term. “A correction is an opportunity,” he said. Kim at Hyundai Motor Securities also said investors should keep core positions in large semiconductor growth stocks in the second half because improving return on equity and a shift to lower price-to-earnings multiples are emerging at the same time.

Nvidia Chief Executive Officer Jensen Huang also expressed confidence in demand for AI infrastructure. Speaking at SK Seorin Building in Seoul’s Jongno district on June 8, Huang said the company is seeing enormous global demand for more AI factories and that business is booming. “We are only at the beginning of building AI infrastructure, and the future is very bright,” he said. He also said now is a good time to buy stocks cheaply.

Kang Kyung-ju, Hankyung.com reporter qurasoha@hankyung.com