Foreign Investors Turn Net Buyers... Has Samsung Electronics' Stock Price Hit Bottom?

Record Quarterly Sales Announcement
Semiconductor Shortage That Hindered Stock Price
Gradual Improvement Expected in Q4

[Asia Economy Reporter Ji Yeon-jin] On the 8th, when Samsung Electronics announced its highest-ever quarterly sales, its stock price showed an upward trend for the second consecutive day. As of 10:23 a.m. that day, the stock price was 72,000 won, up 400 won (0.56%). Although this is significantly lower compared to the stock price near 100,000 won at the beginning of the year, foreign investors have turned to net buying amid the record-breaking quarterly sales exceeding 70 trillion won, indicating a bottoming out.

Samsung Electronics' stock price fell to the year's lowest of 71,200 won on the 6th. This was due to concerns about a 'peak out,' where memory semiconductor prices were expected to peak and decline in the fourth quarter of this year. However, with the record performance backing it up and forecasts that the semiconductor supply shortage, which had been pressuring Samsung Electronics' stock price, will improve in the fourth quarter, the possibility of a rebound is gaining strength.

First, foreign investors who had been selling Samsung Electronics shares and driving down the stock price are now returning to buying. Nearly 900,000 shares were traded through the foreign brokerage window C.L.S.A alone that morning. This is the first time Samsung Electronics' quarterly sales have exceeded 70 trillion won, and contrary to market concerns, the solid semiconductor performance seems to have fueled the shift to foreign buying. Park Yoo-ak, a researcher at Kiwoom Securities, said, "In the case of memory semiconductors, prices of DRAM and NAND rose compared to the previous quarter, and demand also showed strong performance," adding, "At the same time, contract prices with some customers for foundry services also increased, leading to a significant improvement in profitability."

The semiconductor supply shortage that hit Samsung Electronics' stock price also shows signs of improvement starting from the fourth quarter of this year. The semiconductor supply shortage caused by COVID-19 led to rising semiconductor prices, which could benefit non-memory semiconductor companies' performance, but it also raised concerns that production disruptions in automobiles and smartphones could structurally reduce demand, fueling short selling against Samsung Electronics. In particular, in the third quarter, the spread of the COVID-19 Delta variant caused major semiconductor production facilities in Malaysia to halt operations, creating a bottleneck in semiconductor packaging and becoming a new trigger for the semiconductor supply crisis.

However, the semiconductor supply shortage is expected to gradually improve starting from the fourth quarter. The vaccination rate in Malaysia has increased, leading to a sharp decline in COVID-19 cases, and semiconductor factories have resumed operations. This month's operating rate is understood to be at the 80-90% level, a significant improvement from 50% the previous month.

There is also an analysis that this semiconductor supply shortage incident has served as an opportunity to enhance the competitiveness of foundry (semiconductor contract manufacturing) companies. In fact, Samsung Electronics announced through the 'Foundry 2021 Forum' held the day before that the number of customers has increased from 35 in 2017 to over 100 currently. It also mentioned that this number is expected to increase by more than 300 by 2025. Lee Won-sik, a researcher at Korea Investment & Securities, stated, "Due to maximizing production line efficiency and aggressive capital expenditure policies, the supply volume of foundry companies is continuously increasing," maintaining Samsung Electronics as the top preferred stock in the semiconductor industry. Kim Yang-jae, a researcher at KTB Investment & Securities, said, "The stock price adjustment phase of Samsung Electronics that has continued since January this year is considered to reflect semiconductor concerns to a considerable extent," adding, "Compared to competitors, it is currently undervalued, and considering the precedent that memory companies' stock prices led the market by about six months, a stock price rebound is expected after November-December."

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