South Korean stocks experienced a "Black Tuesday" sell-off, with Samsung Electronics and SK Hynix both tumbling more than 10%. Brokerage analysts have diagnosed that this sharp downturn is not a deterioration of industry fundamentals, but rather an overreaction driven by shaken market investor confidence.
While concerns over the sustainability of artificial intelligence (AI) investment are stirring the market, analysis widely concludes that the medium-to-long-term outlook for the semiconductor industry remains solid. On the 28th, the Korea Composite Stock Price Index (KOSPI) plunged 732.09 points, or 10.84%, from the previous session to close at 6,023.66 points. The KOSDAQ index also fell 59.01 points, or 7.72%, to end at 705.85 points.
On the day, the two semiconductor giants, Samsung Electronics (-13.39%) and SK Hynix (-14.65%), both suffered heavy losses, triggering circuit breakers on the main KOSPI board and the KOSDAQ market. The KOSPI briefly dipped below the 6,000-point mark during the session, as risk aversion sentiment in the market cooled sharply.
Market participants attribute the sell-off to the compounding effect of multiple negative factors: the cautious mood ahead of SK Hynix's earnings report on the 29th and Samsung Electronics' on the 30th, as well as the upcoming Federal Open Market Committee (FOMC) meeting, which pushed risk aversion to its peak. Recently, the credit default swap (CDS) premiums for major AI companies like Oracle, Meta, Amazon, and Nvidia have collectively risen, indicating that the financial strain from massive AI investments is already being felt in the credit market.
The controversy surrounding the so-called "AI circular trade," fueled by Nvidia signing a series of large AI investment orders, has further eroded market confidence. However, the mainstream view among South Korean brokerages is that this price correction does not reflect a deterioration of the memory industry's fundamentals. Institutions continue to maintain an optimistic outlook on the medium-to-long-term prospects of memory chips.
New DRAM capacity is being heavily allocated to HBM products, limiting the supply increase of general-purpose DRAM, while demand centered on AI data centers is set to expand continuously. Some analysts also suggest that if memory manufacturers expand the scale of long-term supply agreements (LTAs) with US tech companies, the chip supply tightness could even intensify further.
Coupled with the fact that valuation pressures have been largely released following this sharp sell-off, the market is leaning towards viewing this decline as an irrational overshoot driven by panic. KB Securities researcher Kim Dong-won stated, "Although the stock prices of leading memory companies like Samsung Electronics and SK Hynix have fallen sharply, the fundamentals of the memory sector remain solid. We expect next year to be the most severe year for supply gaps in semiconductor history."
Samsung Securities researcher Jo A-in pointed out, "This correction is not a result of damaged fundamentals, but rather the result of multiple uncertainties suppressing investment sentiment in a tightening liquidity environment. In the short term, it is not advisable to frequently adjust portfolios. Instead, wait for key events to materialize before responding gradually. For the long term, structural allocations should focus on the semiconductor sector, which has clear competitive moats, and industries with strong earnings improvement visibility."