"NVIDIA is the King, Hynix is the Queen"... Will Korea Lead the AI Boom?

Hedge Funds Increase Investments in SK Hynix and Samsung Electronics
"Stock Undervalued Due to Missing Out on AI Boom Benefits" Judgment

Following Nvidia, global hedge funds eager to find the next stock to lead the second artificial intelligence (AI) boom are focusing on South Korean semiconductor manufacturers, major foreign media reported on the 11th (local time).

According to reports, global hedge funds including Man Group, the world's largest listed hedge fund, as well as Singapore's Penghua, Hong Kong's Cloud Alpha and East Eagle (EEAM), are expanding their investments in South Korean semiconductor manufacturers such as SK Hynix and Samsung Electronics. This is based on the judgment that the demand for cutting-edge memory chips held by these companies and government support will increase, boosting their corporate value.

[Image source=Reuters Yonhap News]

Major foreign media noted, "Despite Nvidia's corporate value surpassing $3 trillion last year due to the AI craze, Asian AI companies including SK Hynix have not received much attention," adding, "As more companies enter the generative AI competition, attention is turning to high-bandwidth memory (HBM) manufacturers such as SK Hynix, Samsung Electronics, and Micron Technology."

Matt Hu, Chief Investment Officer (CIO) of Penghua, said, "If Nvidia is called the king in the AI field, then Hynix is the queen," pointing out that although SK Hynix's revenue share from Nvidia is larger than Taiwan's TSMC, it has relatively benefited less from the AI boom driven by Nvidia. He explained that SK Hynix's 12-month forward PER (price-to-earnings ratio) is about 9 times, which is relatively undervalued compared to TSMC's 23 times.

Optimism about Samsung Electronics' stock price is also increasing. Sumant Wahi, portfolio manager at Man Group, said, "The chip industry has excessively shifted production capacity to HBM manufacturing," and predicted, "Prices of existing DRAM chips are expected to rise. There is definitely an opportunity for Samsung Electronics as well." Pierre Hobrechts, head of macroeconomic research at East Eagle, forecasted that Samsung Electronics will catch up in the second half of the year after recording weaker performance compared to TSMC this year. Samsung Electronics' operating profit in the second quarter grew 15 times year-on-year to 10.4 trillion won.

The South Korean government's semiconductor industry support policies have also been credited with driving hedge funds' investment sentiment. The Korean government announced a 26 trillion won 'Comprehensive Semiconductor Industry Support Program' last May. The KOSPI is also on the rise. According to data from the London Stock Exchange Group (LSEG), the Korean stock market has attracted the most investment funds among Asian emerging markets this year. On the day, the KOSPI surpassed the 2,890 mark early in the session, hitting its highest level in 2 years and 5 months. It has risen about 8.5% since the beginning of the year.

Major foreign media reported, "Hedge funds believe that the rewards of investing in Korea outweigh the risks posed by the depreciation of the Korean won and restrictions on short selling." Simon Woo, Asia-Pacific technology research coordinator at Bank of America (BoA), analyzed, "Korea has the potential to sell not only more semiconductor equipment but also cooling systems and home appliances along with the growth of the AI ecosystem."

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