Samsung Electronics and SK Hynix stocks declined sharply on the referenced trading day despite positive earnings from Alphabet (Google), pressured by oil price increases, interest rate concerns, and NAND flash price slowdown fears. Samsung Electronics closed down 6.48% at 252,500 won, while SK Hynix fell 6.67% to 1,791,000 won, according to Korea Exchange data reported on the 25th. The declines occurred as concerns over NAND flash average selling price (ASP) slowdown in the second half of next year weighed on global memory semiconductor stocks. However, brokerage firms assessed the correction as excessive, stating that negative factors have been fully priced in and current levels present a strong buying opportunity, with structural upward momentum toward '600,000-won Samsung Electronics and 4.2-million-won Hynix' remaining intact due to AI infrastructure investment and DRAM price strength.
Samsung Electronics and SK Hynix Record Sharp Declines on Referenced Trading Day
According to Korea Exchange data reported on the 25th, Samsung Electronics closed the previous trading day at 252,500 won, down 6.48%. SK Hynix finished at 1,791,000 won, down 6.67%. The market saw rapid contraction in investor sentiment as international oil prices surged, interest rate concerns grew, and AI investment burden increased. The four-day foreign buying streak also halted.
Foreign Investors Sell 2.6 Trillion Won in Semiconductor Stocks
Foreign investors sold 1.7568 trillion won of Samsung Electronics and 873.1 billion won of SK Hynix on the referenced trading day, fueling the stock price decline. Brokerage firms diagnosed that the main culprit behind the recent pullback in global memory semiconductor stocks was not poor earnings but concerns over NAND average selling price (ASP) slowdown in the second half of next year.
Brokerage Firms Attribute Decline to NAND Price Concerns Already Priced In
Experts view this sharp decline as a process of digesting negative factors rather than fundamental deterioration. According to Mirae Asset Securities, semiconductor sector stock prices have fallen approximately 30% from their peak on the 20th of last month, but have substantially absorbed the possibility of NAND price decline by the end of next year. NAND supply-demand is projected to shift from a 10.8% supply shortage in the first quarter of this year to a 1.1% supply surplus in the third quarter of 2027 and 12.2% in the fourth quarter.
Kim Young-gun, researcher at Mirae Asset Securities, stated: "NAND price decline concerns have been substantially priced into the recent stock correction, and future supply expansion is not at a seriously excessive level. At this point after sufficient correction, we recommend increasing positions based on fundamentals." The firm maintained its target price of 550,000 won.
DRAM and HBM Supply Shortage Projected Through 2028
The growth momentum of DRAM and high bandwidth memory (HBM), core indicators of the semiconductor industry, is actually becoming more solid. DDR5 general-purpose DRAM spot prices have continued rising for over 40 trading days. As production of 6th-generation high bandwidth memory (HBM4) based on 1c DRAM (11-nanometer next-generation ultra-fine DRAM) expands next year and mass production of 7th-generation HBM4E begins in the first half of 2028, structural constraints on general-purpose RAM production capacity are expected to be inevitable for an extended period.
Kang Da-hyun, researcher at KB Securities, explained: "HBM's share of total DRAM wafer production capacity is projected to more than double from 15% this year to 34% next year, with new lines concentrated on HBM allocation. As high-value-added HBM supply increases, general DRAM supply-demand will become even tighter, and despite expansion of 5-year long-term supply agreements (LTA) in the second half, a powerful virtuous cycle with memory prices surging at least 30% in the third quarter will continue through 2028."
Big Tech AI Infrastructure Investment Continues Supporting Long-Term Upward Trend
Continued AI infrastructure investment by big tech companies adds weight to the long-term upward thesis. Considering order backlogs and capital expenditure (Capex) plans of major companies including Google, Amazon, and Meta, analysts suggest that AI investment slowdown concerns are merely short-term incidents, and AI algorithm efficiency improvements will lower inference costs and trigger the 'efficiency paradox' that further stimulates total memory demand.
KB Securities Maintains 600,000 Won Target for Samsung Electronics
KB Securities maintained a target price of 600,000 won for Samsung Electronics, calling it "the biggest beneficiary of Google's AI ecosystem." Researcher Kang stated: "Samsung Electronics is the number one supplier of 50% of Google's server memory and 80% of HBM, and a large-scale earnings surprise is expected in the third quarter. Memory supply shortage will intensify through 2028 due to big tech's unstoppable AI investment."
KB Securities Maintains 4.2 Million Won Target for SK Hynix
KB Securities also maintained a target price of 4,200,000 won for SK Hynix. Kim Dong-won, head of KB Securities Research Division, emphasized: "Sales to big tech and AI data centers will expand to 70% due to increased HBM production ratio and long-term supply agreement (LTA) expansion. Unlike the past, the shift to a B2B-centered sales structure will lower earnings volatility and accelerate valuation increases."
FAQ
Q: Why did Samsung Electronics and SK Hynix stocks decline sharply on the referenced trading day?
A: Samsung Electronics fell 6.48% to 252,500 won and SK Hynix dropped 6.67% to 1,791,000 won due to concerns over NAND flash price slowdown in the second half of next year, combined with oil price increases and interest rate concerns, according to Korea Exchange data reported on the 25th.
Q: What are brokerage firms saying about the current stock price levels?
A: Brokerage firms assess the correction as excessive and state that negative factors have been fully priced in. KB Securities maintains target prices of 600,000 won for Samsung Electronics and 4,200,000 won for SK Hynix, while Mirae Asset Securities maintains 550,000 won for Samsung Electronics, recommending buying opportunities based on fundamentals.
Q: How long is the DRAM supply shortage expected to continue?
A: According to KB Securities researcher Kang Da-hyun, memory supply shortage is projected to continue through 2028, with HBM's share of total DRAM wafer production capacity expanding from 15% this year to 34% next year, creating structural constraints on general-purpose RAM production capacity.
