Samsung Electronics Leading Semiconductors, Position Reversed with SK Hynix

In the stock market, Samsung Electronics is considered a second-preferred stock, while SK Hynix is regarded as the top-preferred stock.

Samsung Electronics' Galaxy 20 (Photo by Asia Economy DB)

[Asia Economy Reporter Kum Boryeong] Due to the impact of the novel coronavirus infection (COVID-19), investment sentiment in the semiconductor sector has weakened, causing repercussions even for Samsung Electronics, which had been leading semiconductor stocks at the forefront. In the securities industry, Samsung Electronics has been downgraded to a secondary preferred stock, while SK Hynix, expected to rebound relatively faster, has been selected as the top preferred stock.

According to the Korea Exchange on the 16th, the semiconductor index fell from 2,877.40 on the 14th of last month to 2,220.14 on the 13th of this month. During the same period, Samsung Electronics' stock price dropped from 61,800 won to 49,950 won, and SK Hynix's from 104,500 won to 82,500 won. This represents a decline of 19.17% and 21.05%, respectively, within a month.

Samsung Electronics, which had been driving semiconductor stocks, is significantly affected by the slowdown in set demand in the upstream industry. Since the outbreak of COVID-19, restrictions on external activities and delays in labor-intensive production lines have led to a projected contraction in global shipments of notebook PCs and smartphones this year.

Although SK Hynix is also affected by this, the impact is analyzed to be less severe than that on Samsung Electronics. Kim Kyungmin, a researcher at Hana Financial Investment, stated, "This year's growth rates are estimated at minus (-) 9.0% for notebook PCs, -4.9% for smartphones, and 3.1% for servers compared to the previous year. Under these circumstances, the downside risk to earnings is higher for Samsung Electronics than for SK Hynix," adding, "Samsung Electronics is affected not only in semiconductors but also in the IT & Mobile (IM) and Consumer Electronics (CE) sectors, where product shipments may fall short of business plans in the IM and CE divisions." The forecast for Samsung Electronics' TV shipments this year has been revised down from 47.4 million units to 45.1 million units, and smartphone shipment forecasts have been lowered from 300 million units to 285 million units.

SK Hynix (Photo by Asia Economy DB)

Hana Financial Investment has changed SK Hynix from a secondary preferred semiconductor stock to the top preferred stock, while Samsung Electronics was downgraded from the top preferred stock to a secondary preferred stock. Researcher Kim analyzed, "After an excessive drop, SK Hynix's stock price is expected to rebound faster than Samsung Electronics."

In particular, SK Hynix's performance is estimated to be solid in the first half of the year. There has been no significant decrease in orders even after the outbreak of COVID-19. The increase in server DRAM demand offsets the potential slowdown in mobile DRAM demand. The rise in content consumption and the impact of remote work appear to be driving demand that extends to data center and server facility investments. Lee Jaeyoon, a researcher at Yuanta Securities, said, "As data traffic continues to increase, investments in data centers by global cloud service providers (CSPs) are being maintained," adding, "In fact, the COVID-19 issue seems to have increased demands for capital expenditures (CAPEX) on facilities by companies."

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