Warning Signs Flash for Samsung, SK Hynix as Chip Profit Growth Nears Peak

IBK Investment & Securities report

"Samsung, SK Hynix profit growth likely nearing peak as foreign investors may pull back"

Memory-chip makers including Samsung Electronics Co. and SK Hynix Inc. may be nearing a peak in earnings growth, according to a brokerage report. The call bears watching because their share prices and foreign investor flows have historically moved in line with profit-growth trends.

Byun Jun-ho, an analyst at IBK Investment & Securities Co., wrote in a July 8 report that Samsung Electronics and SK Hynix are still on track to post solid results through the second half and next year. Margins and profit-growth indicators, however, stand to turn lower.

Based on current market consensus, Samsung Electronics' year-on-year quarterly operating profit growth likely peaked in the second quarter, while SK Hynix's growth rate is expected to top out in either the second or third quarter. On an annual basis, this year marks the short-term high, he wrote.

Past cycles show foreign outflows tended to accelerate when earnings growth rates peaked. In 2017, 2021 and 2024, foreign investors were net sellers in the second half, a pattern Byun said may reflect early profit-taking even as chip industry conditions and earnings remained strong, in anticipation of slower growth the following year.

The semiconductor sector still looks positive given projected operating profit growth of 40% to 50% next year. Even so, investor sentiment could peak and begin to fade because that growth would slow sharply from this year's pace.

Byun added that direct comparisons with past cycles are difficult because the industry is now evolving under a new structure, including long-term supply agreements with big tech companies. If contract periods lengthen and a greater share of earnings is tied to those agreements, concerns about the sector's sensitivity to the economic cycle could ease.

The market is still facing uncertainty over fund flows, with foreign selling pressure continuing to center on semiconductor shares, he wrote. For stocks to resume a meaningful rebound, sentiment toward artificial intelligence and the chip sector needs to improve, or domestic funds need to flow in more aggressively.

Ko Jung-sam, Hankyung.com reporter jsk@hankyung.com

https://www.hankyung.com/article/2026070818026