[Initial Moment] Samsung Electronics Stock Price, Until Winter Passes

[Asia Economy Reporter Ji Yeon-jin] "Memory-Winter is Coming."

Last August, a report titled "Winter is Coming to the Memory Semiconductor Industry" published by the global investment bank Morgan Stanley instantly dragged Samsung Electronics, then called the "80,000-won stock," down to the 70,000-won range. The same applied to its competitor SK Hynix. At that time, SK Hynix also fell more than 23% until October, its lowest point last year. The concentrated sell-off of these top two KOSPI market cap stocks led to a sideways market in the domestic stock market in the second half of last year.

Samsung Electronics recovered to the 80,000-won range again at the end of last year. However, the "80,000-won stock" status did not last long. Since the beginning of this year, foreign investors have been concentrating their sell-off, and recently there are even concerns about entering the 50,000-won range. Foreign investors have net sold nearly 5 trillion won of Samsung Electronics this year. One-third of the foreign investors' net selling amount in the domestic stock market (15 trillion won) was concentrated on Samsung Electronics.

On the other hand, foreign investors have net bought 643.7 billion won of SK Hynix this year. These semiconductor companies both posted their best-ever performance last year, dispelling concerns about the industry outlook. They also set quarterly record earnings in the first quarter of this year. However, foreign investors are uniquely selling only Samsung Electronics. The foreign ownership ratio of Samsung Electronics dropped from 55% last year to 50.78% as of yesterday, the lowest level since the 2008 global financial crisis.

There are several reasons why foreign investors are selling Samsung Electronics this year. Due to U.S. monetary tightening and the Ukraine war, the dollar has strengthened, leading investors to sell emerging market stocks, and Samsung Electronics, with a large holding ratio domestically, has become a target. Additionally, concerns about the second half performance of PCs and smartphones, which are key revenue pillars for Samsung Electronics, and doubts about quality in the foundry sector are also fueling foreign sell-offs. In fact, the flagship smartphone Galaxy S22, released by Samsung Electronics in February, uses a 4nm (nanometer, 1nm = one billionth of a meter) foundry process for its application processor (AP), but consumers have evaluated it as inferior to the previous generation AP produced with the 5nm process. Moreover, 1,885 Galaxy S22 buyers have filed a class-action lawsuit at the Seoul Central District Court. It is also reported that Samsung Electronics’ clients are shifting to Taiwanese foundry competitor TSMC.

Some argue that Samsung Electronics’ struggles stem from a management vacuum. Since investments such as new technology development or mergers and acquisitions (M&A) that built the current Samsung Electronics are being delayed, they claim that a pardon for Samsung Electronics Vice Chairman Lee Jae-yong is necessary. Lee was released on parole last August but faces restrictions on overseas business trips and board attendance.

However, a pardon for the CEO alone cannot be a necessary and sufficient condition for regaining competitiveness. Lee has traveled overseas to the U.S. and the Middle East last year. For spring to come to Samsung Electronics, it must maintain overwhelming superiority over competitors through a super-gap strategy. As of the end of last year, there are 5.06 million small shareholders holding Samsung Electronics stock. One in ten Koreans is eagerly waiting for Samsung Electronics’ spring.

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