U.S. Philadelphia Semiconductor Index Falls; Nvidia's Move into Finance Adds to Mixed Market

U.S. stocks saw the Philadelphia Semiconductor Index fall 2.9%. This is analyzed as stemming from issues surrounding Nvidia's investments rather than problems in the semiconductor industry itself.

Lee Kwon-hee, CEO, noted that the decline in the Philadelphia Semiconductor Index was not so much a semiconductor issue as one arising from discussions about Nvidia-related investments.

U.S. stocks closed slightly lower amid doubts over U.S.-Iran negotiations. As the U.S. took a hard line, demanding economic sanctions on Iran along with compensation for fallen Middle East soldiers, the likelihood of talks collapsing grew.

With concerns over a prolonged conflict rising, WTI crude oil topped $82. Fewer vessels transiting the Strait of Hormuz added to upward pressure on oil prices, which also pushed U.S. Treasury yields up to 4.707%, above the 4.7% level.

Even as the Philadelphia Semiconductor Index fell nearly 3%, the Nasdaq Composite fell only 0.3%. This is because biotech stocks broadly strengthened.

In particular, the U.S. biotech index hit a record high, and other sectors held up despite the weakness in semiconductors, limiting the market's decline.

Nvidia, together with Goldman Sachs, BlackRock and others, set up a $500 million AI investment fund. The fund lends money to AI-related companies, and is effectively read as a move into finance.

The move appears to reflect CEO Jensen Huang's desire to build out the AI ecosystem directly. The market is split between reading Nvidia's moves as confidence in expanding the AI ecosystem, and reading them as a sign that the AI ecosystem struggles to sustain itself without capital injections.

Whether this move into finance will bring a positive multiplier effect for Nvidia, or reveal difficulties in the AI industry, will become clear only over time.

This appears to be a move to strengthen its cloud service competitiveness.

Broadcom is seen as likely to cooperate in producing Microsoft's in-house chips.

Major hyperscalers including Microsoft, Amazon and Google are planning to expand beyond developing their own chips to selling them externally. This is seen as a strategy to further improve profitability through mass production.

This movement is one of the key factors driving these companies' share prices higher. The market is building expectations that hyperscalers will earn more by selling their own chips.

While high-priced HBM (high-bandwidth memory) is generally considered the main driver of cost increases, LPEDR (SOCAMM) prices have in fact risen more sharply.

As demand for LPEDR grows, it was noted that attention should turn to related stocks such as Simmtech and TLB.

As the cost per AI token falls, semiconductor-related shares have declined while AI-related shares have risen. Some interpret this as a negative for the semiconductor market.

Others argue that falling token costs accelerate the popularization of AI, so it should be seen as a positive signal over the long term.

Intel has long been known for not having ample funds, so some say the rights offering is no surprise.

Yet if shares recover amid Nvidia's and governments' investments, the rights offering could be read as Intel's resolve to invest in earnest, so some see it as positive over the long term.

In particular, Exelixis moving straight into Phase 3 trials combining its colorectal cancer drug Cabometyx with it suggests the drug could be quickly adopted if the combination proves effective.

These residual cancer cells can be a major cause of recurrence.

This is an important concept mainly related to drug therapy applied to stage 3 colorectal cancer patients.

Total Keytruda sales reached an annual 50 trillion won last year, and this year could come close to 60 trillion won once factoring in expanded uses and inflation.

Keytruda SC's current market penetration is around 9%, but it is forecast to reach 20% this year on the back of colorectal combination therapy and other factors. This is expected to have a positive impact on the earnings of related companies such as Alteogen.

The report cited a possible tenfold-plus expansion of Samsung's shareholder returns and expectations of record earnings for a fourth straight quarter.

It also projected that a memory supply shortage is unavoidable for at least three years through 2028, and forecast that Samsung would hold the top share of HBM (high-bandwidth memory), whereas other institutions mostly predict second place. It also expects the dividend yield to exceed 7%, emphasizing Samsung's investment appeal.

This reflects a positive outlook on the Korean stock market.

It is also requesting an option to renew annually after the five years (a 'rolling' method).

This suggests SK Hynix is securing contracts on favorable terms, and is seen as a strategy to secure a stable supply chain and revenue.

In particular, in June, additional MPPO capacity is expected to ramp up, expanding volume while limiting the scope of price declines.

Overall earnings improvements are also seen in other key business areas, including aramid, CPI (transparent polyimide) and tire cord.

Under the phrase 'growing on electricity supply anxiety,' the logic holds that even as the power supply becomes unstable, the share price climbs over the wall of doubt.

The target price was maintained despite pressure from research center heads, showing that the market highly values Samsung Electro-Mechanics' solid earnings and growth potential amid uncertainty.

According to recently released revenue results from major Taiwanese IT companies, most, including TSMC, PCB (printed circuit board) makers and MLCC (multilayer ceramic capacitor) makers, recorded triple-digit or higher growth rates year on year.

This shows that global IT demand is solid, with the semiconductor and electronic components markets in particular booming. Strong revenues at Taiwanese companies are expected to have a positive effect on domestic PCB and MLCC-related stocks, potentially leading to share price gains.

If the AI value chain logic works properly, hardware-related stocks such as memory, Samsung Electronics, SK Hynix, power stocks and electric wire stocks should rise together. Yet the global market is currently concentrating investment in software companies, leaving the hardware segment relatively undervalued.

Some point out that this undervaluation persists even though there is no problem with the hardware segment itself, attributing it to specific investment behavior on Wall Street.

Semiconductor analysts on Yeouido say it is hard to make sense of the current market. Even though earnings and figures give no reason for shares to fall, they are declining, leaving analysts confused. This reflects the difficulty of balancing objective analysis against subjective conviction amid irrational market moves.