Chip Supply-Chain Stocks Jump Ahead of Samsung, SK Hynix Catch-Up; One Surges 40%

Kospi Starts October Strong on Micron Blowout

Rebounds as Rate and Oil Pressures Ease

Micron Posts Record Quarterly Results

US August PCE Comes in Below Forecast

Samsung, SK Hynix and Chip Suppliers Gain

'Korean Memory Stocks Have More Room to Rise'

South Korean stocks got off to a strong start in the first trading day of the fourth quarter. Hopes that rises in interest rates and oil prices are nearing a peak, together with Micron Technology's blowout results and record September semiconductor exports, reinforced confidence in the memory-chip upcycle. Semiconductor shares rallied across both large-cap names and smaller materials, parts and equipment makers, while pharmaceutical and biotech stocks also posted strong gains, easing concerns about crowding in a narrow group of sectors.

Micron Says Shortage Will Deepen Through 2028

The Kospi closed 1.95% higher at 6,971.35 on Oct. 1, rebounding after four straight losing sessions. The index was down more than 1% early in the session as retail investors, who had built up heavy sell orders near the 7,000 level, dumped 1.4305 trillion won of shares. It later turned higher as institutional investors stepped in, aided by share buybacks and buying from pension funds that had completed quarter-end rebalancing.

Foreign investors extended net selling to a fifth straight session, unloading 548.5 billion won on Oct. 1, though the selling eased in the afternoon. On the Kosdaq, foreigners bought 227.8 billion won worth of shares, joining institutions, which purchased 568.1 billion won, in lifting the index. The Kosdaq jumped 4.48% to 894.29.

Cooling inflation and easing oil-price concerns provided the first trigger for the rebound. US personal consumption expenditures prices for August came in below market expectations overnight, while worries over crude subsided after reports that daily oil exports from the Middle East had recovered to 98% of prewar levels. The odds of an additional Federal Reserve rate increase this month fell to about 40% on Oct. 1 from 70% two days earlier.

Micron's record results gave fresh momentum to a market that had been weighed down by macro headwinds. The company reported its strongest quarterly earnings on record and gave guidance for revenue and earnings per share this quarter that easily topped market expectations. Its gross margin guidance of 86.3% came in slightly below forecasts because of higher performance-pay costs, which Micron described as a one-off factor.

Micron also said supply and demand conditions in memory and storage would be "much tighter" not only next year but through fiscal 2028, boosting expectations for longer-term gains in the memory sector. The share of long-term supply agreements, or SCAs, in revenue rose to 35% from 25% in the previous quarter.

Chip Supply-Chain Stocks Rally as Well

JPMorgan said after Micron's earnings that Korean memory stocks have greater upside. Micron has recovered about 75% from its July low, while SK Hynix and Samsung Electronics have rebounded only 25% and 37%, respectively, leaving them with three to six times more room to climb back to their late-June highs.

Goldman Sachs and Hana Securities lowered their third-quarter operating-profit forecasts for Samsung Electronics on Oct. 1, citing currency headwinds. Even so, both kept their target prices unchanged at 490,000 won and 480,000 won, respectively, saying their outlook for memory demand and pricing had strengthened. Samsung Electronics rose 2.8% and SK Hynix gained 3.2%.

The benefits of the semiconductor boom have been even more pronounced for materials, parts and equipment makers. TrendForce said lead times for ABF, a packaging-substrate material, had stretched to 48 to 56 weeks, more than four times the normal 12-week lead time. That suggests a more severe supply shortage than in memory, where lead times are running at 2.5 to 3 times normal.

While investors wait for a decisive catalyst in large-cap memory stocks amid a view that they have already risen substantially, smaller chip supply-chain names have moved first. Over the past month, Samsung Electronics has gained 3.5% and SK Hynix 7%. By contrast, Hana Micron, which focuses on back-end semiconductor processing, has surged 43%, while Samwha Capacitor, Wonik Holdings and Daeduck Electronics have climbed 41%, 41% and 32%, respectively.

Micron said on Oct. 1 that it saw no way to catch up with the supply shortfall and would raise fiscal 2027 capital spending from its previous plan. Samsung Securities said expectations for investment in semiconductor materials, parts and equipment have been building for more than a year, with further upside still larger. Its positive view on the sector remains intact.

Bin Nan-sae, Hankyung.com reporter binthere@hankyung.com