"Semiconductor Is Over" vs. "No, More to Come": Heated Debate Over Memory Peak

Market Correction on Memory Semiconductor Peak-Out Concerns

Nasdaq Falls on Worries Over Memory Semiconductor Peak

Slowing Earnings Growth Inevitable vs. Supply Shortage Likely to Last at Least Until Next Year

On the 7th, as the KOSPI index plunged more than 4% in early trading and fell below the 8,000 mark, the status of the domestic stock market was displayed on the electronic board at the dealing room of Hana Bank in Jung-gu, Seoul. July 7, 2026. Photo by Jinhyung Kang

Concerns have emerged that the memory semiconductor industry has reached its peak, impacting the Korean stock market as well. The main reasons behind the "semiconductor peak-out" theory include a slowdown in semiconductor price increases, a decline in profit growth for Samsung Electronics and SK hynix, and worries about decreased investment from major U.S. big tech companies. On the other hand, there are also strong arguments that a continued shortage of memory semiconductors through next year, improved performance by related companies, and expectations for large-scale shareholder returns will drive a rebound in stock prices.

Stock Market Corrects on Fears of Memory Semiconductor Peak-Out

On July 8, the KOSPI opened at 7,452.48, down 2.66% from the previous trading day, but rebounded and was trading at 7,716.27, up 0.78% as of 10:03 a.m. The KOSDAQ was trading at 820.85, down 1.25%.

On the KOSPI, foreign investors and individuals net sold 200 billion won and 400 billion won, respectively, putting downward pressure on the index, but institutions led the rebound by net buying over 600 billion won. This is interpreted as bargain buying following the sharp decline the previous day.

Overnight, the New York stock market fell, led by declines in semiconductor stocks, which caused the Korean market to start lower as well. On the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 52,925.15, down 130.70 points (0.25%) from the previous session. The large-cap S&P 500 index dropped 33.58 points (0.45%) to 7,503.85, and the tech-heavy Nasdaq index fell 302.47 points (1.16%) to 25,818.69. Losses were particularly notable among semiconductor stocks such as Micron (-4.71%), Intel (-9.66%), AMD (-6.51%), and Marvell (-7.45%).

However, the Korean market rebounded, centered on semiconductor stocks. On this day, SK hynix started the session at 2,134,000 won, down 1.5% from the previous trading day, but as of 10:07 a.m., it was up 3.86% at 2,287,000 won. At the same time, Samsung Electronics was trading at 294,500 won, down 0.51% from the previous session. Other large-cap stocks such as SK Square (-0.22%), Samsung Electro-Mechanics (-1.03%), Hyundai Motor (-0.10%), LG Energy Solution (-2.56%), and Samsung Life Insurance (-4.0%) were weak.

There is a fierce debate in the market over whether memory semiconductor stocks have reached their peak. Morgan Stanley, in a report released the previous day, argued that memory semiconductor stocks could undergo a correction, citing the slowdown in DRAM price increases, stabilization of inventory improvements, and a peak in earnings-per-share (EPS) upward revisions. While it forecast that memory semiconductor companies' profits would rise next year compared to this year, Morgan Stanley diagnosed that the slowing growth rate could trigger a stock price correction. Morgan Stanley also previously published a report titled "Winter is coming" about the memory semiconductor market, which caused sharp declines in Samsung Electronics and SK hynix shares and earned the firm the nickname "grim reaper of memory semiconductors."

In the U.S., some analysts said that despite Samsung Electronics' strong earnings, it failed to meet heightened market expectations, which has increased downward pressure across AI-related semiconductor stocks. Chris Murphy, co-head of derivatives strategy at Susquehanna International Group, commented, "The assessment that Samsung Electronics' results fell short of expectations continues to weigh on the entire AI hardware sector and is prompting selling in memory-related stocks." He added, "It now appears that investors are shifting their attention beyond the AI hardware leaders, which saw excessive buying, to a broader earnings cycle and rotation."

In Korea, a report lowering the target price for Samsung Electronics was also released. Kiwoom Securities stated, "In the second half of the year, with a slowdown in EPS growth, volatility in the memory industry will expand due to various changes," and lowered its target price for Samsung Electronics from 430,000 won to 390,000 won. Yuak Park, a researcher at Kiwoom Securities, predicted, "It seems unlikely that memory prices in the second half will exceed expectations," and added, "Accordingly, it is also unlikely that Samsung Electronics' EPS growth rate in the third quarter of this year will surpass the current market expectations."

Inevitable Slowdown in Profit Growth vs. Supply Shortage to Last at Least Through Next Year

However, most domestic securities firms remained positive on the semiconductor industry outlook. They argued that the current stock correction is due to profit-taking after a steep rally, and that fundamental factors such as earnings prospects and shareholder returns remain solid. Dongwon Kim, head of research at KB Securities, raised his target price for Samsung Electronics from 550,000 won to 600,000 won, saying, "Recent concerns about AI are merely noise," and claimed, "The spread of AI agents will increase memory demand threefold, autonomous driving fivefold, and robotics tenfold or more."

Seonwoo Kim, a researcher at Meritz Securities, said, "Samsung Electronics' second-quarter earnings far exceeded market expectations," and explained, "The current cycle is characterized by a severe shortage of memory supply due to spatial constraints, which will persist at least until the fourth quarter of next year." Kim advised, "Investors should base their decisions on where we are in the memory cycle, rather than on fears stemming from a gap between vague expectations and reality."

Meanwhile, as SK hynix prepares to list its American Depositary Receipts (ADR) on the Nasdaq, a large number of investors are reportedly flocking to the offering. According to Bloomberg, the SK hynix ADR offering has seen strong initial demand from global long-term investment funds and tech-focused investors. About 1,000 institutional investors reportedly participated in a marketing call for management held on July 6.

As interest in SK hynix ADRs grows, UBS has analyzed that it would be advantageous to buy SK hynix ADRs and sell the locally listed common shares. This view is based on the expectation that the newly issued ADRs are likely to trade at a premium.

This content was produced with the assistance of AI translation services.