[Good Morning Stock Market] U.S. Semiconductor Stocks Plunge... Domestic Market Expected to Open Lower

ASML, Nvidia Fall After Report on China Developing DUV Technology
Apple Regains Top Market Cap Amid Concerns Over Excessive AI Investment
Effectiveness of Gradual Buying Focused on Leading Stocks

With U.S. semiconductor stocks plunging, the domestic stock market is also expected to open lower.

On the 27th, the current status of KOSPI and others is displayed on the board in the dealing room of Hana Bank, Jung-gu, Seoul. Photo by Yonhap News Agency

On July 27 (local time), the Dow Jones Industrial Average closed at 52,210.08, up 262.83 points (0.51%) from the previous trading day on the New York Stock Exchange. The S&P 500 rose 1.20 points (0.02%) to 7,413.18, while the tech-heavy Nasdaq Composite fell 43.74 points (-0.18%) to close at 24,932.08.

The Philadelphia Semiconductor Index, which tracks 30 major U.S.-listed semiconductor companies, fell 2.23% that day. Nvidia dropped 4.99%, Micron 2.25%, SanDisk 11.02%, Western Digital 4.21%, and AMD 5.17%, all declining simultaneously. SK hynix’s American Depositary Receipts (ADR) declined by 7.47%.

The weakness in semiconductor stocks was caused by a combination of factors: negative developments from China and growing doubts about the sustainability of investments in artificial intelligence (AI). IT industry outlet The Information reported that China has commenced the development of deep ultraviolet (DUV) lithography equipment used in semiconductor manufacturing. Following this report, shares of ASML, the Dutch semiconductor equipment company listed in the U.S., plunged 5.8%. This news has heightened concerns that Chinese memory companies, including Changxin Memory Technologies (CXMT), could relieve equipment supply bottlenecks by introducing domestically produced DUV equipment. As a result, there are fears this could expand their production capabilities, increase the global supply of standard DRAM, and intensify competition in the global memory market.

However, Kiwoom Securities pointed out that these concerns may be somewhat exaggerated. The company noted that the specific manufacturer and detailed performance of the equipment have not been disclosed, only five units are expected to be produced initially, and the 2027 target is said to be just 20 units. This is still far behind ASML’s planned annual production of 130 units by 2026. As a result, the market’s excessive sensitivity to news about China’s DUV equipment production is likely due to overall investor sentiment having weakened after a sharp correction in semiconductor-related stocks since July.

Investors are keeping a close eye on upcoming second-quarter earnings reports and capital investment plans from major big tech companies such as Meta and Microsoft (on the 29th), and Amazon and Apple (on the 30th). These firms are raising funds through bond issuance and paid-in capital increases, but uncertainty is growing about whether they will be able to recoup their investments quickly.

While concerns over excessive AI investments by other major tech firms have surfaced, Apple—previously dubbed a “latecomer to AI”—has reclaimed the world’s top market capitalization position for the first time in 15 months since losing it in April last year. Since Apple has not made significant investments in AI so far, its financial health is being regarded as sound.

Meanwhile, international oil prices declined following the suspension of U.S. airstrikes on Iran. Brent crude futures settled at $88.36 per barrel, down 8.7% from the previous session, while U.S. West Texas Intermediate (WTI) futures closed at $82.61 per barrel, a drop of 7.5%.

Han Ji-young, a researcher at Kiwoom Securities, commented, "While the successful listing of CXMT could have some psychological impact, the actual risk of major outflows remains limited." He added, "With the domestic stock market having reached valuation lows and passing through a period of peak volatility in prices and flows, a strategy of gradual buying focused on leading stocks during market corrections is likely to be more effective."

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