KB Securities stated on the 27th that while Korean semiconductor stocks have plummeted recently due to Middle East geopolitical risks and concerns about artificial intelligence (AI) investment sustainability, the industry's structural growth trajectory has become even clearer. The brokerage firm diagnosed the recent stock price correction as short-term volatility driven by weakened investor sentiment rather than fundamental deterioration, as memory price increases and supply shortages are expected to continue for years. Samsung Electronics and SK Hynix, Korea's top two companies by market capitalization, saw their stock prices fall 33% and 41% respectively over the past month as AI investment sustainability concerns and Middle East geopolitical risks simultaneously emerged.
Samsung Electronics and SK Hynix Stocks Fall 33% and 41% Over Past Month
KB Securities reported that over the past month, Samsung Electronics (005930) and SK Hynix (000660) stock prices declined 33% and 41% respectively. The firm assessed that sector performance and industry conditions are actually improving despite the stock price movements. KB Securities forecast that memory semiconductor prices will rise at least 30% in the third quarter, and memory supply shortages will intensify further through 2028. The firm projected that AI substrate supply shortages will deepen in the second half, continuing supply constraints in the AI semiconductor ecosystem.
KB Securities Forecasts Tightest Semiconductor Supply in 2027
KB Securities predicted that 2027 will see the tightest supply situation in semiconductor industry history. The firm analyzed that starting next year, long-term supply agreements (LTA) from global big tech companies will expand in earnest, with new memory production volumes being allocated first, which could significantly reduce general-purpose memory volumes supplied to smartphone and PC manufacturers. The expansion of high bandwidth memory (HBM) production was cited as a factor intensifying supply shortages. Kim Dong-won, head of KB Securities Research Division, stated that HBM's share of global DRAM wafer production capacity will expand from 15% this year to 34% next year, more than doubling. Kim projected that as new production capacity concentrates on high value-added products like HBM, general-purpose DRAM supply increases will be limited and memory shortages for consumer IT devices will intensify further.
AI Investment at $800 Billion Represents 2.5% of US GDP
KB Securities analyzed that market concerns about an AI investment bubble are excessive. The firm noted that US big tech companies including Google, Amazon, Microsoft (MS), and Meta share the perception that the risk of under-investment is greater than over-investment in securing AI market leadership, and AI infrastructure is expected to play a role connecting the entire industry. The firm explained that even assuming an aggressive AI investment scale this year (approximately $800 billion), the investment ratio to US gross domestic product (GDP) is only 2.5%, far from the 5-7% levels when bubbles formed during past technology revolutions. Kim stated that the semiconductor industry's trend will not change despite stock price turbulence, presenting Samsung Electronics, SK Hynix, Samsung Electro-Mechanics (009150), and LG Innotek (011070) as top picks.
FAQ
Q: Why did Samsung Electronics and SK Hynix stocks fall over the past month?
A: According to KB Securities, Samsung Electronics and SK Hynix stock prices fell 33% and 41% respectively over the past month as AI investment sustainability concerns and Middle East geopolitical risks simultaneously emerged, significantly weakening investor sentiment.
Q: What did KB Securities forecast about semiconductor supply in 2027?
A: KB Securities predicted that 2027 will see the tightest supply situation in semiconductor industry history, as long-term supply agreements from global big tech companies expand and HBM production increases, reducing general-purpose memory volumes available to smartphone and PC manufacturers.
