Samsung, SK Hynix Resume Rally as Micron Beat Eases Peak-Cycle Fears

Source

Korea Economic Daily

Summary

Shares of Samsung Electronics and SK Hynix surged after a surprise earnings beat from Micron and expectations that the semiconductor supply shortage will last longer.
The odds of a rally lasting through late next month have increased as SK Hynix's ADR listing, forecasts for the Kospi to reach 15,000, and higher earnings estimates and price targets for Samsung Electronics and SK Hynix add support.
Still, investors need to monitor the recent short-term surge, potential profit-taking, volatility, and whether foreign net buying materializes.

Forecast Trend Report by Period

Micron beat lifts chip stocks

"Semiconductor boom has further to run"

SK Hynix ADR listing adds momentum

Targets and earnings forecasts raised over the past month

Kospi seen climbing to 15,000

"Short-term surge may bring bigger swings"

The Kospi rose 5.42% on June 25 to close at 8,930.30. Gains by South Korea's two biggest chipmakers stood out, with SK Hynix jumping 13.06% and Samsung Electronics rising 5.28%. A display board at Hana Bank's dealing room in Seoul's Euljiro district shows the closing levels of the Kospi and other benchmarks. / Choi Hyuk reporter

Micron Technology, widely viewed as a barometer for the semiconductor industry, posted a surprise earnings beat, sending shares of Samsung Electronics and SK Hynix sharply higher. The two stocks had already surged 199% and 348.08% this year on the chip supercycle, making them the top two targets of net buying by retail investors at a combined 72 trillion won. They had recently tumbled on profit-taking and concerns that the cycle was nearing a peak. Sentiment reversed after Micron released its results on June 24. Investors are now betting the semiconductor upcycle will last longer than expected, improving the outlook for both earnings and share prices.

◇Chip rally pushes Kospi back above 9,000 intraday

On June 25, the Kospi closed up 5.42% at 8,930.30, according to the Korea Exchange. Micron's strong results revived appetite for semiconductor shares across the board. Samsung Electronics rose 5.29% and SK Hynix jumped 13.06%. News a day earlier that SK Hynix would list an American depositary receipt in the US also added support. In premarket trading, SK Square surged 29% to a record high. The sharp advance in the Kospi triggered a buy-side sidecar on the main board at about 9:07 a.m., temporarily suspending the validity of program buy orders.

Micron's earnings also fueled expectations that semiconductor supply shortages could persist through 2028, extending the industry's boom. That helped restore investor confidence in chip stocks. JPMorgan's bullish-case forecast that the Kospi could climb to 15,000 also underpinned the index.

Kim Dong-won, head of research at KB Securities, said tight semiconductor supply through June 2028 would imply at least two more years of favorable industry conditions. Calling a peak in the chip cycle now would be premature, he said. He also cited strategic customer agreements, or SCAs, which could account for half of Micron's sales going forward. Under those contracts, customers commit in advance to volumes and prices. That structure could reduce the sharp cyclicality that has long defined the chip business and make the market less vulnerable to future swings.

Kim added that SK Hynix's ADR could eventually be added to the Nasdaq 100. If investors re-rate SK Hynix, Samsung Electronics may also come under upward pressure on a relative-valuation basis.

◇Rally may continue through late July

Brokerages expect semiconductor shares to stay strong for now. The timing of SK Hynix's ADR listing is lining up with earnings season, creating a supportive backdrop for the stocks. Samsung Electronics is set to report second-quarter results in early July, while SK Hynix is due to release its figures later that month.

Earnings forecasts for both companies have been edging higher. According to EpicAI, an AI-based investment information service, the consensus estimate for Samsung Electronics' second-quarter operating profit rose 0.42% over the past month to 8.55117 trillion won. The forecast for SK Hynix increased 1.68% to 6.33717 trillion won. Analysts have also raised their price targets. The average target for Samsung Electronics climbed 17.50% over the past month to 451,400 won, while the average target for SK Hynix rose 25.33% to 2.952 million won. Ko Young-min, an analyst at Daol Investment & Securities, said the sector's investment appeal could stand out again, much as it did during the first-quarter earnings season. Samsung Electronics and SK Hynix may try to break above their previous highs by late July, he added.

Still, experts said investors should brace for profit-taking after the recent sharp run-up. An official at one asset manager said conviction in a prolonged chip boom has strengthened, but volatility tied to macro variables and valuation concerns could return at any time. Investors need to watch whether upcoming earnings reports validate the optimism with actual results and whether foreign investors begin a sustained wave of net buying that can push the index higher, the person added.

Cho Ara, Hankyung.com reporter rrang123@hankyung.com

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