Semiconductor Strength Amid US Market Downturn, Domestic Power Plan Re-evaluated

Last Friday, the U.S. stock market fell across the board due to a combination of three major negative factors. First, the U.S. 10-year Treasury yield rose again in a single day, putting pressure on the market. Additionally, Walmart, considered a barometer of U.S. consumption, plummeted over 9% after its earnings announcement, reflecting slowing consumer sentiment. On top of this, geopolitical instability contributed to the market decline, as former President Donald Trump foreshadowed 'the most devastating economic pressure' on Iran, escalating Middle East risks and causing international oil prices to surge again.

While the U.S. stock market generally declined, the memory semiconductor sector maintained its strength. Micron announced plans to establish a $10 billion AI memory research lab, signaling large-scale investments to prepare for the AI era. Bolstered by this news, the Philadelphia Semiconductor Index rose 0.53%, and SK Hynix's American Depositary Receipts (ADR) also recorded a 4% increase, demonstrating the robustness of the memory semiconductor sector.

Major positive developments for the domestic semiconductor industry and data center construction have been announced in succession. Most notably, the re-evaluation of the 12th Basic Plan for Long-term Electricity Supply and Demand was released. This plan includes a projection that peak power demand will increase from 158GW to 165GW by 2040, due to an expected six-fold increase in semiconductor power demand and a three-fold increase in data center power demand. Furthermore, plans for constructing two additional semiconductor fabs in the Honam region and the timeline for building a Hyundai Motor AI data center in Saemangeum have been confirmed, bringing important events that will drive domestic industry for years to come to the forefront.

Walmart's poor performance is closely related to the deepening K-shaped consumer polarization in the U.S. market. Walmart's same-store sales growth slowed from 4.1% in the previous quarter to 2.6%, and its transaction count growth rate also nearly halved from 3.0% to 1.5%. These trends indicate a widening consumption gap between the top 10% and bottom 50% of income earners. Currently, the top 10% in the U.S. own 87.4% of all stocks, while the bottom 50% own only 1.1%, suggesting that asset imbalance is leading to consumption polarization.

JPMorgan issued a positive outlook for SK Hynix, anticipating the initiation of a memory shareholder return cycle. JPMorgan analyzed that SK Hynix is highly likely to implement over 180 trillion won in shareholder returns by 2027. This reflects expectations for strengthened shareholder-friendly policies based on future improvements in the memory semiconductor industry and increased corporate profits.

The Ministry of Climate, Energy and Environment and the General Committee for the 12th Basic Plan for Long-term Electricity Supply and Demand announced their re-forecast for 2040 power demand through a public discussion. According to the announcement, the maximum power demand for 2040 has been significantly raised from the previous 158GW to 165GW. This reflects the expected six-fold increase in semiconductor power demand and a three-fold increase in data center power demand. Furthermore, total power consumption is projected to increase by an additional 190TWh, underscoring the growing need for national power infrastructure expansion. Alongside this, the confirmed timelines for the construction of two additional semiconductor fabs in Honam and the Hyundai Motor AI data center in Saemangeum have raised expectations for related industries.

With the 12th Basic Power Supply Plan forecasting an increase in power demand to 165GW, a time when the absolute amount of renewable energy expansion must grow, regardless of generation mix, has become inevitable. As a result, HD Hyundai Energy Solutions is expected to directly benefit from this renewable energy expansion. Particularly, the creation of wind and solar power complexes in the Honam region and a strategy to link them with semiconductor fabs could serve as additional growth drivers. Furthermore, the 6th policy discussion scheduled for August 26 has the potential to act as a policy momentum. The suggested buying price is between 134,000 and 136,000 won, with a stop-loss at 128,000 won.

EO Technics, a company possessing specialized laser equipment technology essential for HBM and AI semiconductor production, has recently seen a steady influx of institutional investment from investment trusts, pension funds, and private equity funds. The company produces laser annealing and cutting equipment, securing high technological competitiveness in the domestic HBM and AI semiconductor equipment sector. Especially with the increasing demand for AI semiconductors and the expected growth of the HBM-related equipment market, this is positively impacting EO Technics' stock price. A strategy of staggered buying between 395,000 and 410,000 won is considered effective, and the stock price is expected to continue its upward trend.

TLB (TLB), a company that manufactures substrates related to AI server testing, is garnering attention due to the increasing demand for test socket module substrates as the AI server market expands. Currently, a strategy of staggered buying for TLB between 32,000 and 33,800 won is being considered, leveraging the dips during Friday's trading session. As the AI industry grows and demand for related components is expected to steadily increase, TLB's mid-to-long-term growth potential is positively assessed.