Lee Jae-man, an analyst at Hana Securities, stated in a report on the 20th, “Concerns that semiconductor companies, which are sensitive to economic cycles, will find it difficult to maintain current high operating profit margins have been reflected in stock prices,” but added, “The recent sharp drop in stock prices appears excessive.”
Compared to their recent highs, Kioxia’s stock price has fallen by 52%, SK hynix(000660)’s by 37%, and Micron Technology’s by 30%. SamsungElectronics(005930)’s stock price has also dropped by 30%. NVIDIA and TSMC, which have relatively stable operating profit margins, saw smaller declines of 14% and 9%, respectively.
In essence, selling pressure was concentrated on companies—such as Kioxia, SK hynix, and Micron—whose earnings fluctuate significantly with the memory market cycle. This reflects growing concerns that these companies will struggle to maintain their current levels, given that their projected operating profit margins have risen as high as 70–80%.
However, analysts noted that there is a discrepancy between the concerns about earnings deterioration already priced into stock prices and the actual market conditions. SK hynix’s intraday low last week was 43% below its high. This represents a decline similar to the level seen in 2022, when SK hynix posted a net loss. Given that current profit forecasts remain intact, this suggests that stock prices have already factored in a significant deterioration in market conditions.
DRAM prices are also continuing their upward trend. Average DRAM spot prices rose 2% last week and are up 7% compared to a month ago. DRAM-related exchange-traded funds (ETFs) that include SamsungElectronics, SK hynix, and Micron have seen net inflows of $4.5 billion so far this month. Funds flowing in over the last five trading days alone totaled $2.4 billion.
The earnings reports from U.S. hyperscalers were cited as a catalyst for the rebound in semiconductor stocks. Hyperscalers refer to big tech companies that operate large-scale data centers and purchase AI semiconductors and memory.
The combined growth rate of capital expenditures for Alphabet, Microsoft, Meta, and Amazon is projected to rise from 80% year-over-year in the first quarter of this year to 83% in the second quarter and 92% in the third quarter. Although it is expected to decline to 79% in the fourth quarter, it will still remain at a high level. Analysts explain that if investment demand from Big Tech companies is sustained, memory companies will also be able to maintain high profitability.
Whether earnings exceed market expectations is also crucial. According to an analysis by Hana Securities, after Alphabet’s revenue exceeded market forecasts in 2025 and beyond, the one-month average stock price returns for SamsungElectronics and SK hynix were 11% and 16%, respectively. When earnings fell short of forecasts, returns were limited to 2% and -3%, respectively.
The key indicators the market focuses on vary by company. For Alphabet, revenue influenced the trend of semiconductor stocks, while for Meta and Amazon, it was earnings per share. For Microsoft, the key factor was whether actual capital expenditures exceeded market forecasts. In particular, after Microsoft’s capital expenditures exceeded expectations, the one-month average stock price returns for SamsungElectronics, SK hynix, and Micron were 19%, 26%, and 27%, respectively.
In the medium to long term, it was viewed as highly likely that the existing leading sectors would drive the rebound. In the past, when the index rebounded after sharp declines caused by the dot-com bubble, the global financial crisis, or aggressive interest rate hikes by the U.S. Federal Reserve, the returns of sectors that had led the previous bull market often outperformed the index.
The analyst stated, “Looking at past cases, even during the rebound following a sharp decline, the sectors that had previously led the market tended to drive the index’s recovery,” adding, “It is necessary to focus on the KOSPI’s existing leading sectors—semiconductors, IT hardware, and power equipment.”
