Semiconductor Strength Has Absolutely Not Broken, It's Just a Correction...How to Respond? | Kim Rok-ho, Hana Securities Research Center Team Leader

Summary

Hana Securities team leader Kim Rok-ho argues the semiconductor correction is just a dip, not a trend break. Memory shortages will continue through next year, and Samsung Electronics is undervalued relative to SK Hynix given its memory-heavy profit mix. He also sees Korean semiconductor equipment stocks benefiting from massive capex announcements.

• Memory DRAM shortage remains severe and will not ease until at least end of next year.
• Samsung Electronics' profits are nearly all from memory, making it very similar to SK Hynix.
• Samsung's stock has failed to reflect this, creating a catch-up opportunity.
• Massive capex plans by Samsung and SK Hynix create positive sentiment for Korean semiconductor equipment and materials stocks.
• Micron's disclosure of long-term supply agreements could support a re-rating of memory stocks' multiples.
• Short-term demand cuts by Chinese smartphone makers and Apple's potential switch to Chinese memory do not affect the supply-demand balance.
• Oversupply risk from ultra-large fab investments is considered low probability.