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Original Bloomberg article: https://www.bloomberg.com/news/newsletters/2026-05-13/samsung-sk-hynix-show-stubborn-korea-discount-persists-in-ai-age
Non-paywalled: https://archive.ph/yLxzj
The equity market in South Korea is sizzling, and it isn’t because of a viral noodle challenge. It’s driven by the one product the world treated as a boring, frumpy commodity for years: memory chips.
The conventional DRAM that used to live quietly inside your PC or smartphone is now affecting everything from profit margins on Nintendo consoles to the prospects of AI data center expansion across the world. More so than cultural exports, it’s now thrust Korea into a kingmaker role in the global economy. Tech lynchpins Samsung and SK Hynix, the nation’s two largest companies, are the go-to providers of the suddenly scarce component.
Despite the AI gold rush, the so-called Korea discount; a perennial markdown on Korean stocks tied to governance concerns is alive and well and it’s getting weird. Samsung’s shares have gained roughly 130% this year while SK Hynix has just about tripled in value. And yet, they’re still trading at a massive discount compared to global peers.
Just look at the numbers. The two Korean memory makers are valued at a multiple of roughly 6 times forward earnings (because their sales and profit are also rocketing up). That compares to the Philadelphia Semiconductor Index home to Nvidia and memory rival Micron which trades at more than 25 times. Even as Samsung joined the rarified ranks of the $1 trillion valuation club last week, it feels like the market is still struggling with the math.
Analysts tell me that conventional DRAM profit margins are now screaming past 80%. It’s a result of a severe supply squeeze as memory chipmakers aggressively pivoted their production lines toward high-bandwidth memory (HBM) to feed the AI beast, leaving the supply of general-purpose chips in a state of famine. HBM drew everyone in with profit margins in the 60% range, now the old stuff is even more lucrative.
Not everyone is feverish with excitement, however. There’s palpable tension in the market, a particular “peak cycle” anxiety that refuses to go away. As Albert Yong, managing partner at hedge fund Petra Capital Management in Seoul, tells me: “The market is a mirror of our fears. Half the traders think ‘this time is different’ because of AI, and the other half are waiting for the rug-pull.”
Read More: Memory Chip Makers Say AI Alters Boom-and-Bust Cycle
Richard Clode, a portfolio manager on the global technology team at Janus Henderson, says the extraordinary move in semiconductor stocks is justified by very strong AI demand driving record margins and now long-term contracts to make this cycle more durable.
“Given the record profits, you could argue all memory stocks globally are inexpensive,” Clode said. “The Korean discount is one of the reasons SK Hynix is looking to do a US ADR listing this year. Some global funds have emerging market restrictions or are wary of markets where the time zone precludes live trading.”
The most fascinating shift is how the former commodity cycle seems to have been short-circuited, to use an industry term. In the old days, making DRAM often ended in losses. You’d have inventory trackers watching stockpiles and prognosticating when the supply will overrun demand. Currently, I’m hearing server inventory is down to single-digit weeks. For smartphones and PCs? About 10 weeks. That’s scant padding to cushion any unforeseen interruption of production or shipping.
The power dynamic has flipped. The biggest tech companies and electronics makers are no longer waiting to see end-user demand before signing quarterly contracts. Instead, they are proactively seeking long-term agreements (LTAs) to secure future capacity on Samsung or SK Hynix’s fabrication lines. Instead of drily running demand-prediction algorithms, customers are engaged in a procurement street fight.
Part of the stubborn discount reflects geography. Korean memory fabs sit almost entirely in Korea or China, while global peers have plants spread across Japan, Taiwan, Singapore and Micron is building back in the US. That supply-chain concentration quietly embeds a geopolitical premium into the share price: tariff risk, potential US pressure to reshore AI supply chains, and the background noise of regional uncertainty. SK Hynix shuttered its last US DRAM fab back in 2008. That decision looks very different in today’s political climate.
Xingchen Yu, emerging markets strategist at UBS Global Wealth Management, retains cautious positivity. “Recent earnings reports from memory companies have shown record-high growth, and strong positive revisions are likely to further support the segment,” he says, pointing to robust compute demand from the rapid expansion of AI agents.
Still, he cautions investors that this is a tactical trade and there will eventually be a falloff. “DRAM prices are likely to peak around mid-2027, in my view, and investors could begin to price this in a year in advance.”