Korean Chip Stocks Will Win No Matter Who Survives the AI Giants' 'Deathmatch': KB Financial Group

Why It Matters

Cheap valuations and long‑term memory demand make Korean chip makers a resilient play, shaping global fund allocations as AI spending intensifies.

Key Takeaways

• Korean memory chip valuations remain cheap despite rally.
• Foreign investors sell KOSPI, domestic retail drives price gains.
• Labor union disputes unlikely to derail Samsung’s earnings surge.
• Memory shortage may persist through 2028, supporting chip demand.
• Korean semiconductors poised to profit regardless of AI war outcome.

Summary

KB Financial Group’s analyst argues that South Korea’s memory‑chip giants remain undervalued and will thrive regardless of which AI heavyweight wins the emerging "deathmatch." The discussion highlighted that Micron trades around 12 × earnings while SK Hynix and Samsung hover at 6‑7 ×, meaning earnings upgrades are outpacing share‑price gains and the rally is far from exhausted.

Despite a 14‑day streak of foreign net selling in the KOSPI, domestic retail investors have kept the market buoyant, creating a polarized environment that forces global funds to trim oversized positions. Labor‑union friction at Samsung Electro‑Mechanics, which surged 70 % in five days, is seen as a localized risk that is unlikely to derail the broader sector’s earnings momentum.

The analyst joked that Korean semiconductors are “selling tickets to a death‑match” among AI giants, noting three upcoming mega‑IPOs in the AI space that will inject fresh capital. A persistent memory shortage, projected to last until at least 2028, underpins demand, while over‑capacity is expected to take years to materialise.

Investors should view Korean chip stocks as a strategic hedge amid AI hype, but remain prepared for a 20‑30 % correction after a 400 % rally. The firms’ ability to toggle between aggressive capex and conservative postures gives them a tactical edge over hyperscalers locked in a costly competition for AI dominance.

Original Description

Peter Kim, global investment strategist at KB Financial Group, says from a valuations and fundamentals perspective, we are "not even halfway through" the rally in South Korea's semiconductor and memory giants Samsung and SK Hynix. He also discusses the net-selling of the KOSPI index by foreign institutional investors, and the potential risks of labor unions action in the two companies.