Has the market already reflected the worst? Variables to check now | Lee Seon-yeop, AFW Partners CEO

Summary

Lee Seon-yeop, CEO of AFW Partners, discusses the severe recent sell-off in Korean semiconductor stocks, arguing it was driven by mechanical liquidations rather than fundamental changes. He systematically refutes fears about hyperscaler funding constraints and Chinese memory oversupply as exaggerated and already priced in. He highlights Samsung Electronics' strong conference call guidance as evidence that underlying demand remains robust and supply tight. While acknowledging the pain investors have suffered, he suggests the price collapse may be an overreaction, and if worst-case scenarios fail to materialize, a significant recovery could follow. He also cautions against excessive leverage and urges a patient, fact-based approach.

• The sharp decline in Korean memory stocks was primarily driven by mechanical/leverage unwinding, not deteriorating fundamentals.
• Foreign brokerage reports overwhelmingly attribute the sell-off to technical factors, with little mention of fundamental problems.
• Hyperscaler free cash flow turning negative is a quarterly flow issue, not a cash crunch; near-term AI capex remains committed.
• Expected Fed rate cuts in September could improve borrowing conditions for hyperscalers, easing funding concerns.
• China's CXMT threat is years away: its funding is small, HBM yields are poor, and it cannot supply meaningful volumes before 2028.
• Samsung's recent conference call reinforced that memory supply remains extremely tight; demand far exceeds available supply.
• Current stock prices have already priced in a severe demand-destruction scenario that is not yet happening.
• Investors should avoid rushed decisions and leverage, and instead wait for fears to be confirmed or refuted over time.