It's Not an AI Slowdown... Interest Rates Trigger Semiconductor Correction [Click e Stock]

U.S. 10-Year Yield Nears 4.75%; Long-Term Rates Rise Globally

Surge in AI Bond Issuance Highlights Credit Cost Pressure

Semiconductor Outlook Hinges on Memory Prices and HBM Demand

Yonhap News Agency

As semiconductor stocks wavered, concerns arose in the market about the end of the artificial intelligence (AI) rally. However, the trigger behind this adjustment was not a slowdown in AI demand but the rise in interest rates. With long-term U.S. Treasury yields nearing 5% and the cost of financing required for AI data center investments increasing, volatility across risk assets has intensified. This suggests that the bond market, rather than a downturn in the semiconductor sector, has led to stock market instability.

On August 20, Mirae Asset Securities diagnosed this in its report on “Strategies to Respond to Volatility Fueled by Rising Interest Rates.” According to the report, this adjustment reflects the impact of rising long-term rates and changes in credit costs, rather than doubts about the growth prospects of the AI industry itself.

In fact, global interest rates are rising, led by higher long-term rates in the United States. The yield on 30-year U.S. Treasuries has exceeded 5.3%, and the yield on 10-year notes has also climbed to around 4.7%. Long-term rates in Germany and the United Kingdom have reached their highest levels since the global financial crisis. In Japan, the 30-year government bond yield has surged to its highest level since 1999. This indicates that rising interest rates are not just a U.S. issue; they are being seen across major economies.

The reason the market is reacting more sensitively is due to the nature of the rate increase. If rates were climbing because of strong economic growth, stock markets could interpret this positively. However, current concerns center around fiscal deficits, increased government bond issuance, and rising term premiums. There is an underlying worry that even if the U.S. Federal Reserve lowers its policy rate in the future, long-term yields may not decline by the same margin.

The cost of AI investment is also amplifying sensitivity to interest rates. Since the start of this year, AI-related bond issuance has reached $489 billion (about KRW 680.3946 trillion), surpassing last year’s annual total of $322 billion. As companies expand their investments in AI data centers and semiconductors, the need for funding has grown, and spreads on investment-grade technology bonds have widened. The larger AI investments become, the greater the influence of the bond market and corporate capital costs on the stock market.

However, there is little reason to interpret this as a structural deterioration in AI or the semiconductor industry. Domestic semiconductor stock valuations are already quite low. The forward price-earnings ratios (PER) for Samsung Electronics and SK hynix stand at 3.93 and 3.28, respectively, lower than Micron’s 6.50 and the KOSPI’s 6.67.

Therefore, some analysts believe the valuation pressure resulting from higher long-term rates is likely to have only a limited effect on domestic semiconductor stocks. Although interest rates can drive short-term stock price volatility, memory prices, demand for high bandwidth memory (HBM), AI facility investment, and changes to profit forecasts remain the core factors determining the direction of domestic semiconductor stocks.

Mirae Asset Securities points to the U.S. 10-year Treasury yield as a key indicator for market volatility. If the yield enters the 4.8–5.0% range, it could impact the relative attractiveness of equities versus bonds and risk appetite, so short-term monitoring is necessary. However, the report underlines that entering this yield range does not immediately signal a sell-off for domestic semiconductor stocks.

Sukwhan Kim, a researcher at Mirae Asset Securities, analyzed, “Since the valuation of domestic semiconductor stocks has already declined significantly, and if earnings forecasts are maintained, the impact of rising interest rates on stock prices may also be limited.” He added, “If there are no meaningful changes in the business environment or earnings forecasts for semiconductors, the recent stock price adjustment is more indicative of increased short-term volatility caused by macroeconomic factors and supply-demand dynamics, rather than a disruption of the overall trend.”

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