Foreign investors go on buying spree for Samsung Electronics, SK hynix

An overview of Samsung Electronics' manufacturing facility in Texas, U.S. / Courtesy of Samsung Electronics

Shares of Samsung Electronics and SK hynix are rallying on President Lee Jae-myung’s policy drive to help enhance the competitiveness of the two Korean chipmakers, as he vows to push for a special law that will grant greater subsidies and tax incentives to the industry, market analysts said Monday.

Also advancing investor optimism is their technological prowess and chip unit price uptick, driven by growing artificial intelligence (AI) product demand.

Analysts say the two firms’ low price-to-book (PBR) ratios indicate limited possibility of price downtrends, stressing that the undervalued shares are set for further gains in the months to come.

“Both stocks will gain through the second half of this year,” said Park Yoo-ak, an analyst at Kiwoom Securities. “The chipmakers will be subject to lingering macro uncertainties, but their technical edge will generate robust outcomes to bolster the share prices.”

Samsung is showing improved efficient outputs in its dynamic random-access memory (DRAM), as evidenced by declines in defective output.

DRAM is a type of random access memory (RAM) that stores data in a capacitor and transistor pair. It is commonly used as the main memory in computers as temporary storage for running programs and data.

Also proceeding without major issues are high-bandwidth memory (HBM) 3E, the fifth-generation fastest, highest-capacity variety of HBM, to be supplied to U.S. tech titans Nvidia and AMD.

SK hynix will also benefit from strong HBM demand and AI server investment, Park said.

NAND flash prices are expected to continue to trend upward in the July-September period. NAND flash is a type of non-volatile storage technology and is used in devices like solid-state drives (SSDs), memory cards and USB drives, particularly where large files are frequently stored and erased.

Strong demand is also expected for enterprise SSDs (eSSDs), or server-grade SSDs designed specifically for data center workloads. This will translate into a SSD price increase between 5 and 10 percent.

These factors will ensure robust earnings for both Samsung and SK hynix, according to Park.

According to financial market data, Samsung Electronics stock prices have risen more than 5 percent this month, closing at 59,100 won on June 5.

SK hynix rose more than 3 percent over the same period to close at 224,500 won on Monday.

The two led the benchmark KOSPI to rise above 2,800 points for the first time in nearly 10 months.

In June alone, offshore investors have bought 691.8 billion won ($509 million) of SK hynix shares and 453.1 billion won of Samsung shares.