South Korean markets reopened Tuesday after a Monday closure for Buddha's Birthday, with SK hynix shares trading near their recent highs. The semiconductor giant closed at 1,941,000 won on May 22, just below its recent peak of 1,995,000 won, as investors weigh strong AI memory demand against signs of foreign profit-taking.
Market Context and Performance
SK hynix gained approximately 6.7% for the week ending May 22, climbing from 1,819,000 won. The stock's trajectory has been volatile, lifted by optimism around AI-related memory chips but tempered by profit-taking and concerns about overcrowding in the trade. The company's high-bandwidth memory (HBM) chips remain in tight supply, underpinning its position as a key beneficiary of the AI hardware boom.
The broader KOSPI index finished at 7,847.71 on Friday, up 0.41%, with chip stocks driving much of the movement. Markets are now open for a shortened holiday week, with trading expected to remain choppy.
Foreign Selling and Regulatory Warnings
Foreign investors offloaded a net 10 trillion won in Samsung Electronics and SK hynix last week, according to Yonhap. The sell-off included 5.33 trillion won in SK hynix and 5.26 trillion won in Samsung Electronics shares since May 18, accounting for roughly 73% of total foreign net selling in Korean equities during that period.
South Korea's Financial Services Commission (FSC) issued a warning ahead of the rollout of single-stock leveraged products tied to Samsung and SK hynix. The FSC cautioned that these products, which aim to double daily returns through borrowing or derivatives, could amplify losses in volatile markets. Sixteen exchange-traded funds and two exchange-traded notes linked to the two chipmakers are set to list on May 27.
Samsung Labor Deal and Competitive Dynamics
Samsung Electronics reached a tentative wage agreement with its union last week, averting a planned 18-day strike by approximately 48,000 workers that threatened chip supply. The deal, brokered by the government, also highlighted competitive pressure from SK hynix, as Samsung workers complained about missing bonuses compared to their rival, which secured an early lead in supplying advanced AI memory to Nvidia.
"Samsung did a better deal than SK hynix in terms of costs," noted Park Jun-young, a former Samsung chip HR official now covering the industry. The union vote on the agreement runs through May 27, leaving some uncertainty.
AI Memory Demand Outlook
SK hynix management remains bullish on demand. "Client requests for HBM chip supplies over the next three years already far exceeds our production capacity," said Ki Tae Kim, head of HBM sales and marketing, during the company's earnings call. The company posted record first-quarter revenue of 52.5763 trillion won, operating profit of 37.6103 trillion won, and net profit of 40.3459 trillion won.
Analysts expect pricing power to persist as AI demand outpaces softer PC and smartphone markets. "Stock price volatility has recently expanded due to issues such as the Samsung Electronics union strike, but in a volatile market, what ultimately matters is earnings and valuation," said Na Jung-hwan, an analyst at NH Investment & Securities.
Risks and Outlook
Despite the positive backdrop, risks remain. A pullback in HBM demand from Nvidia or other AI-chip buyers, continued foreign outflows, or disruptions from new leveraged products could sour sentiment. Investors largely shrugged off Samsung's labor issues after the tentative deal, but the union vote adds a layer of uncertainty. SK hynix, now a global AI bellwether, will be closely watched as the holiday week unfolds.
