Should You Sell Samsung Electronics and SK hynix Now? CEO Ha Chang-bong Presents Semiconductor Market Outlook and Investment Strategy

The amendment requires companies to cancel treasury shares and encourages them to raise shareholder return ratios, acting as an important starting point for the rise of the domestic stock index. This change is expected to help raise the value of undervalued Korean companies.

The phenomenon of stock prices failing to rise despite strong earnings is one of the questions investors ask most often. It suggests that the market may have already priced in those earnings, or that market noise is weighing on the stock. Conversely, when earnings are weak but the stock rises, it may likewise be due to earlier pricing or other factors.

These results are regarded as among the highest quarterly profits of any company in the world.

Signs of earnings improvement began to appear about a year ago.

This index signals a market crash, and the higher it climbs, the greater the market's instability. The volatility index has now fallen below 60, showing that the market is gradually stabilizing.

For example, Samsung Electronics and Apple both make smartphones, yet Samsung's corporate value is less than half of Apple's. This gap in valuation is closely tied to the fact that Korean companies are based on manufacturing.

Semiconductor export indicators cover a range of items, including memory, NAND flash, and SSDs, and changes in these indicators are used as grounds for the view that memory has peaked.

Some semiconductor items are showing a slowdown in price increases. For example, if a chip rises tenfold from $1 to $10, then rises 10% from $10 to $11, and then rises only 0.1% from $11 to $11.10, the market perceives that growth has stopped. This slowdown had already been anticipated by major securities firms and institutions before the June earnings announcements.

It is projected to grow to more than 1,000 trillion won in 2027. This implies growth of more than 300 trillion won, a forecast of sustained growth of theoretically over 40%.

For example, if a chip priced at $10 per unit stays at $10 the following month, the market takes it as a failure to meet the expected rise to $10.50. Many analysts evaluate the market's reaction based on this spot price trend. The market had expected continued price increases, but as prices actually stalled, some selling driven by disappointment emerged.

Their cloud and AI service results made it difficult to find grounds for falling chip prices or declining demand. As this data came out, sellers who had dumped shares based only on second-quarter earnings re-entered the market, and stock prices showed signs of finding a bottom. This indicates that the solid growth of companies providing AI chip services is supporting demand across the semiconductor market as a whole.

This policy trend forms the first backdrop for the expansion of shareholder returns at domestic companies.

In answer to questions from analysts and reporters during the conference calls after the late-July earnings announcements by Samsung Electronics and SK hynix, large-scale shareholder return policies were signaled for the third or fourth quarter. Such announcements have fueled market expectations, and discussion of large-scale share buybacks is becoming more active.

This policy uses excess profits collected through corporate income tax as a fund for future growth drivers. Such a policy could also influence companies' dividend decisions and encourage corporate value enhancement from a long-term perspective.

An ADR is a form of listing in the U.S. that replicates a Korean-listed share, and it generally commands a higher premium than the Korean share. Even after listing, the gap still exceeds 30%, meaning SK hynix's Korean stock is valued roughly 30% lower than the same company's shares listed in the U.S.

Because of these combined factors, it is hard to conclude that U.S. shares are expensive simply because the gap is high. Liquidity gaps have not yet settled into a stable pattern, so many illusions may be at work.

Many media outlets and interviews say "earnings are good but the stock is cheap," but this may be the most dangerous expression. What matters most is that the message should be that earnings are strong and the stock is also good at the same time.

It is judged that this cycle is still largely maintained today. This is because the shorter smartphone replacement cycle, compared with five years in the past, affected the change in chip demand. Although the cycle has shifted, the basic rhythm has not changed much.

Samsung Electronics' future depends on the foundry (contract chip manufacturing) segment turning profitable. SK hynix's future can be found in maintaining a solid share of the HBM (high-bandwidth memory) market and in its strength in advanced packaging. Both companies are expected to lead the future semiconductor market based on their respective strengths.

Therefore, rather than making a hasty judgment right now, CEO Ha Chang-bong said, it is wise to watch the market's direction until at least about two months from now (August to September).