Semiconductor Deep Freeze... Foreign Investors 'Sell' Samsung Electronics and SK Hynix

Samsung Electronics Net Sell 303.7 Billion KRW, SK Hynix 397.6 Billion KRW
Samsung Electronics Q4 Operating Profit Estimated at 8.2264 Trillion KRW ... Below 10 Trillion for First Time in 7 Quarters
SK Hynix Operating Profit Forecast Minus 386.4 Billion KRW ... Expected to Turn to Loss

[Asia Economy Reporter Hwang Yoon-joo] Foreign investors have been selling off Samsung Electronics and SK Hynix since the beginning of this month. This is attributed to weakened investor sentiment due to the poor earnings outlook for both companies from the fourth quarter through the first half of next year.

According to the Korea Exchange on the 13th, foreign investors sold SK Hynix and Samsung Electronics stocks worth 397.6 billion KRW and 303.7 billion KRW respectively through the 12th of this month, ranking first and second in net sales. Stock prices also declined. During the same period, Samsung Electronics' stock price fell 4.9% from 62,600 KRW to 59,500 KRW, while SK Hynix dropped 4.2% from 84,700 KRW to 81,100 KRW.

The reason foreign investors are selling semiconductor stocks is the expectation that earnings will worsen from the fourth quarter through the first half of next year. According to FnGuide, Samsung Electronics' operating profit for the fourth quarter of this year is expected to be 8.2264 trillion KRW, a 40.67% decrease compared to the same period last year. This marks the first time in seven quarters since the first quarter of last year (9.38 trillion KRW) that operating profit will fall below the 10 trillion KRW mark. SK Hynix's operating profit forecast is a negative 386.4 billion KRW, indicating a return to losses.

Oh Kyu-jin, a researcher at DB Financial Investment, analyzed, "Both DRAM and NAND prices have plunged more sharply than expected (each down 24.3%), leading to continued semiconductor earnings weakness. Smartphone sales are slowing mainly in the mid-to-low price range, making a decline in semiconductor demand inevitable compared to the previous quarter, and the sharp drop in the KRW-USD exchange rate is expected to negatively impact overall profitability."

The earnings outlook for both companies next year is even gloomier. Samsung Electronics' operating profit is expected to shrink to 6.9704 trillion KRW in the first quarter (-50.64% year-on-year) and 6.6922 trillion KRW in the second quarter (-52.53%). SK Hynix's operating profit is forecasted to widen losses to -968.4 billion KRW in the first quarter and -901.4 billion KRW in the second quarter.

Semiconductor experts expect the industry to rebound in the second half of next year, anticipating a bottom in early next year. Roh Geun-chang, a researcher at Hyundai Motor Securities, said, "Although SK Hynix's six-month target price has been lowered from 123,000 KRW to 105,000 KRW, considering the upside potential and the industry rebound in the second half of next year, the first half of next year will be an opportunity for SK Hynix to establish a bottom."

In contrast, Park Yoo-ak, a researcher at Kiwoom Securities, stated, "If expectations for industry improvement increase following Micron's earnings announcement scheduled for next week, semiconductor stocks are likely to show an upward trend around the year-end and New Year period," adding, "We maintain our overweight rating on the semiconductor sector."

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