As Samsung Electronics and SK hynix, which had both set all-time highs on the back of the artificial intelligence (AI) boom, fell on the 13th, a jinx reappeared that when their combined market capitalization exceeds 30% of the Korea Exchange's main board, a pullback follows. In the past as well, when the two stocks' combined market capitalization topped 30% of the KOSPI market, their share prices declined.
However, optimism still prevails that the memory semiconductor cycle amid the AI boom will remain strong through 2026.
On the morning of the 13th, Samsung Electronics was trading around 92,900 won, down about 2% from the previous session. SK hynix was also trading at 413,000 won, down 3.5%. The moves appear to reflect rekindled concerns over U.S.-China trade tensions.
Coincidentally, the timing of the two stocks' pullback came after their combined market capitalization (excluding preferred shares) surpassed 30% of the KOSPI index. Based on the closing price on the 10th, Samsung Electronics' market capitalization was 558.8138 trillion won, accounting for 19.3% of the KOSPI index's market capitalization. On the same day, SK hynix's market capitalization was 311.585 trillion won, or 10.8% within the KOSPI index, putting the two stocks' combined share at 30.1%.
There have been several repetitions of a correction after the combined market capitalization of Samsung Electronics and SK hynix exceeded 30% of the KOSPI index. This is usually because the 30% threshold is crossed when money rushes in on expectations for the memory semiconductor cycle. On Jan. 20, 2020, Samsung Electronics stood at 25.4% and SK hynix at 5%, bringing the two stocks' combined share within the KOSPI index to 30.4%. Afterward, the COVID-19 crisis erupted and their share prices plunged.
The combined market capitalization of Samsung Electronics and SK hynix also surpassed 30.8% and 30.6% within the KOSPI index on Jan. 11, 2021, and Jul. 11 last year, respectively. But in 2021 the semiconductor cycle turned down, and last year the so-called "semiconductor winter" narrative emerged, sending share prices on a downward trajectory.
There are differences from the past. When the two stocks' combined market cap previously broke the 30% mark, Samsung Electronics' weight was overwhelmingly larger. In 2020, 2021 and last year, Samsung Electronics' market capitalization accounted for more than 20% of the KOSPI index. This time, Samsung Electronics' market-cap weight was below 20%, but SK hynix topped 10% for the first time, pushing the combined share past the 30% threshold.
Some also say the backdrop lifting the two stocks lately differs from the past. The expectation is that the semiconductor cycle centered on AI will differ from prior cycles. Lee Jong-uk, an analyst at Samsung Securities, cited as differences from past semiconductor cycles: ▲ the presence of two profit growth engines—AI high-bandwidth memory (HBM) and commodity DRAM; ▲ AI infrastructure investment being larger and longer than demand in other cycles; and ▲ memory demand not moving in tandem with the consumer market.
Lee said, "In general, during a semiconductor cycle, as corporations' earnings rise, valuation tends to compress, but this time it is accompanied by rerating expectations," adding, "Regardless of profitability, the preemptive competition among Silicon Valley mega-cap companies and their funding capacity are the key drivers of semiconductor demand."
There is also lingering hope that the U.S.-China trade dispute, which triggered a correction in the domestic stock market including Samsung Electronics and SK hynix, will not escalate into a full-scale war. U.S. President Donald Trump suggested the possibility of negotiations on the social media (SNS) platform Truth Social the same day, saying, "The United States is not trying to hurt China but to help."