Chinese semiconductor and AI investment slowdown reflected... Samsung Electronics and SK Hynix fell excessively

Summary

Kim Jang-yeol, Head of Research Center at Unistory Asset Management, argues that Samsung Electronics and SK Hynix have fallen excessively, now trading near the cycle-low P/E of 5.3x, because memory price declines will be cushioned by long-term agreements and Chinese supply fears are overstated. He also views ASML's recent selloff as overdone. He notes that Big Tech's off-balance-sheet liabilities could limit future AI capex and keep a lid on sector multiples.

• Korean memory stocks (Samsung, SK Hynix) are oversold, trading at cycle-low P/E around 5.3x on next-year estimates.
• Memory price increases are peaking, but LTA contracts will moderate declines and protect earnings.
• Chinese memory supply threat from CXMT is overblown; domestic DUV equipment capacity is too small to cause a flood.
• ASML fell 8% on China DUV fears, but the potential market share loss is only 4-5%, making the drop excessive.
• Big Tech's off-balance-sheet leasing and debt commitments could constrain future capex and limit upside for semiconductor stocks.
• Two-times leveraged ETNs have amplified selloffs and may reduce the speed and excitement of future rebounds.
• Micron and Nvidia are holding key levels, indicating the AI cycle is not breaking down.