Trump-Xi summit looms over Korea’s chip rally

U.S. President Donald Trump moves to shake hands with Chinese President Xi Jinping as they hold a bilateral meeting at Gimhae International Airport, on the sidelines of the Asia-Pacific Economic Cooperation summit in Busan, Oct. 30, 2025. Reuters-Yonhap

A high-stakes summit between U.S. President Donald Trump and Chinese President Xi Jinping set for Thursday is putting Korea's semiconductor rally in the spotlight, market watchers said Wednesday.

As the leaders of the world's two largest economies prepare to meet in Beijing, investors are closely watching whether the talks, expected to focus heavily on trade and economic issues, could affect Korea's export-driven stock market, particularly semiconductor shares that have powered recent gains.

Market attention is centered on whether Washington and Beijing could reach agreements related to rare earth supplies and semiconductor trade restrictions.

In recent years, Korean chipmakers have emerged as major beneficiaries of escalating U.S.-China tensions, as global customers increasingly turned to Korean suppliers viewed as less exposed to the trade and technology conflict.

Analysts said a possible U.S.-China thaw in semiconductor tensions could undermine some of the advantages Korea's two chip giants — Samsung Electronics and SK hynix — have enjoyed during the prolonged trade dispute.

From Korea's perspective, concerns are growing that Washington could ease certain export controls on chipmaking equipment to China in exchange for more stable rare earth supplies, potentially allowing Chinese firms to regain momentum in chip production.

"Following their summit in October last year, Beijing appears to be in a stronger position to extract concessions from Washington, including potential easing of semiconductor export restrictions, by leveraging its control over rare earth supplies," said Cho Yeon-joo, an analyst at NH Investment & Securities.

Cho added that such a scenario could be negative for Korean memory chipmakers over the longer term if Chinese firms gain traction in advanced chip production.

"There are speculations that the recent sharp rally in Korean semiconductor shares could lose some momentum if the U.S. and China reach some form of agreement involving rare earth supplies and semiconductor restrictions," said Huh Jae-hwan, an analyst at Eugene Investment & Securities.

Samsung Electronics and SK hynix together account for more than 40 percent of the benchmark KOSPI's total market capitalization, meaning any pullback in semiconductor shares could weigh heavily on the broader market.

Beyond chip negotiations, investors are also watching whether Trump and Xi could agree to extend their tariff truce or cooperate on easing geopolitical tensions surrounding Iran, both of which could support sentiment in the Korean market.

"If the U.S. and China extend their trade truce, it would help ease concerns over the global economic slowdown and improve investor sentiment toward export-driven economies like Korea," said Joo Won, a senior economist at Hyundai Research Institute.

Joo added that any signs of easing tensions in the Middle East following the Trump-Xi summit, including a possible Chinese diplomatic engagement in the U.S.-Iran conflict, could also provide a positive signal for Korean equities.