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In the first half of this year, South Korea’s semiconductor exports achieved triple-digit growth rates, continuing their upward momentum. However, concerns about a possible “peak-out” (a post-peak decline) are emerging in the stock market.

According to Hanwha Investment & Securities on August 2, although the market's current concerns are somewhat excessive, the real risks are expected to materialize when a “downturn in export prices” and a “narrowing of the export gap with China” become evident in the future.

For now, the likelihood of increased competition from Chinese semiconductor companies is considered low. This is because, although China’s memory semiconductor exports have steadily increased, there remains a significant gap if one excludes volumes re-imported through third countries and production by foreign companies with local facilities.

Hye Yoon Lim, a researcher at Hanwha Investment & Securities, explained, “Despite China’s large-scale investments, its semiconductor self-sufficiency rate is only rising gradually, and South Korean companies continue to maintain a monopolistic position in high value-added markets such as high-bandwidth memory (HBM).” She added, “It is difficult for moves such as the listing of Changxin Memory Technologies (CXMT) or efforts to localize semiconductor equipment to immediately disrupt the global landscape.”

However, she stressed that the current excess demand does not guarantee continued favorable conditions going forward, so it is important to monitor whether these potential risks become a reality. A downturn in semiconductor export prices and a narrowing of the export gap with China were cited as the key indicators of increased market pressures.

A decline in export prices would indicate that global demand is weakening, for example if major Big Tech companies reduce their aggressive investments in artificial intelligence (AI). Also, if the export gap between South Korea and China narrows at a time when China’s share in global semiconductor equipment investment is expected to rise from 13% in 2015 to 37% by 2025, it would signal the onset of supply surplus driven by China.

Lim advised, “Considering the solid semiconductor demand, the downturn in the stock market appears somewhat overdone, but moving forward, we should check for the likelihood of potential risks materializing and respond accordingly.”

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