The market is placing bets on additional rises in Samsung shares, which saw a net inflow of about $1.2 billion in July. But SK Hynix’s stock saw an outflow of over $200 million.
As investors explore ways for Samsung Electronics Company to catch up its lost ground in advanced memory chips for artificial intelligence (AI), the company has at least briefly regained its position as South Korea’s most significant stock.
In July, its stock increased by 10% but its smaller competitor, SK Hynix Inc.’s stock decreased by almost 8%. Samsung has contributed more than one-third of the month’s increase in Korea’s Kospi (Korea Composite Stock Price Index), the top-performing equity index this year.
Analyst Jay Kwon of JPMorgan Chase & Co. stated that they have observed an increase in investors’ interest in Samsung’s comeback in the high-bandwidth memory market. He added that they also see that Samsung’s R&D efforts are progressing favourably for the company.
The market is placing bets on additional rises in Samsung shares, which saw a net inflow of about $1.2 billion in July. But SK Hynix’s stock saw an outflow of over $200 million. Over the past few months, investors have been negatively betting on SK Hynix, while short interest in Samsung has decreased.
Samsung has held a dominant position in Kospi for so long, with its current 15% weighting that is still about double that of hard-charging SK Hynix. However, in the last two years, investors have praised SK Hynix’s early supply of HBM (High Bandwidth Memory) to work with Nvidia Corp.’s AI processors, making its shares the largest driver in the index.
Since SK Hynix announced investment in additional capacity after reporting record earnings on Thursday, it seems doubtful that the leadership in HBM will change in the near term. Since Samsung announced its profits had declined earlier this month, investors are expecting the company to improve soon.
Marcello Seongsoo Ahn, a portfolio manager at Quad Investment Management Co., stated that although the initial results were poor, the shares did not fall. The share prices may be at their tipping point right now as the equity market looks six months forward.
All eyes are on the upcoming AI memory, with SK Hynix and US-based Micron Technology having already sent prototypes of their chips to customers. Analysts are increasingly anticipating that Samsung will catch up in the next few years, with approvals from Nvidia being a key point to watch.
Analyst Mark Li of Sanford C. Bernstein & Co. stated that SK Hynix holds a 57% market share in HBM in 2025, followed by Samsung at 27% and Micron at 16%. He estimated that two Korean chipmakers will hold 38% by 2027, while Micron will come second with 24%.
It is a warning sign for the entire industry as Goldman Sachs Group downgraded SK Hynix last week due to the anticipated decline in HBM prices next year and gains by competitors. Other dangers include geopolitical concerns and tariffs, as well as potential new entrants into the market from China.
There are some positive catalysts, including the outlook for Samsung’s smartphone business and its efforts to improve governance and increase its valuation. After many legal struggles, the group’s executive chairman and founder’s grandson, Jay Y. Lee, is gradually changing up the management.
Tim Campbell, CEO and managing partner of Edinburgh-based Baillie Gifford & Co, stated that it is interesting to observe changes made at Samsung, especially its progress with Nvidia. Additionally, the company has made efforts to loosen the founding family’s influence. He hopes it is successful.
On July 31, the company will submit its detailed second-quarter earnings report.
