"Already Weakened, This Is a Bad Omen"... Variables Dictating the Direction of Samsung and SK Hynix

[Anchor]

A plunge of this magnitude is a trend previously seen only during financial crises or COVID-19. Experts interpret that this drop was driven by a combination of factors, including the pursuit by Chinese semiconductors, concerns over rate hikes, and weakened investment sentiment. All eyes in the market are now turning to the U.S. benchmark interest rate decision and Big Tech earnings announcements coming up in two days. Whether a positive signal regarding semiconductor investment emerges will be the key to a rebound.

Min Gyeongho reports.

[Reporter]

The piece of news that delivered the biggest shock to the stock market today (the 28th) was reports that China has set out to develop DUV equipment.

It is a deep ultraviolet lithography system that draws circuits onto silicon wafers using light, serving as core equipment for semiconductor production.

The technology is virtually monopolized by ASML of the Netherlands, and exports to China have been banned since 2019.

This led to concerns that if China succeeds in mass-producing DUV and further emerges as a major supplier in the memory market, the profitability of Samsung Electronics and SK Hynix, which would be driven into competition, would decline.

With investment sentiment already fragile due to repeated sharp fluctuations driven by theories that semiconductors have peaked, the news of the successful listing of Chinese DRAM company ChangXin Memory yesterday, followed by the news of DUV development today, enveloped the market in a fear of Chinese semiconductors.

[Han Jiyoung / Deputy Manager, Investment Strategy Team, Kiwoom Securities: Because psychological stamina has been largely depleted, just the news of developments like Chinese-made DUV lithography equipment has weighed heavily on stock prices....]

Since ChangXin Memory also fell by nearly 4% today, some opinions suggested that what created the overall downward mood was interest rates.

The argument is that doubts are spreading over whether U.S. Big Tech companies, which borrow money to purchase semiconductors, can continue to spend in an environment of rising interest rates.

[Lee Sang-heon / Chief Research Fellow, Research Headquarters, iM Securities: (For semiconductor-related investments,) they have no choice but to keep issuing bonds. What is heavily demanded of Big Tech companies carrying significant debt? Even higher interest expenses. When Meta tried to (issue bonds) a few days ago, a 7% yield was demanded.]

While the general consensus is that today's drop was excessive even considering market concerns, the first thing to watch is the U.S. benchmark interest rate, which will be decided early the day after tomorrow.

Even if rates are frozen, it is crucial to see whether signals strongly hinting at the possibility of future hikes will emerge.

Additionally, experts note that rather than quarterly earnings, hints about future investments and demand from the earnings announcements of SK Hynix, Samsung Electronics, Microsoft, and Meta starting tomorrow will determine the direction of the market.

(Photo: Yonhap News) (Video Reporting: Lee Byung-joo, Lee Moo-jin, Video Editing: Park Ji-in)
※ Please note: This article was translated by AI and may contain errors.