“The semiconductor downcycle is over”…  Samchun and Hynix begin to break through highs

“The semiconductor downcycle is over”… Samchun and Hynix begin to break through highs

‘Semiconductor weather vane’ Micron investment opinion upgraded to Buy
Semiconductor, spring comes in the middle of winter… “Price has been on the rise since the end of this year.”

(Graphics = Reporter Shin Mi-young win8226@)

“The semiconductor industry downcycle is over” (Deutsche Bank). Global semiconductor stock prices are receiving a warm welcome due to the stock market’s prediction that the memory semiconductor downcycle will end and semiconductor prices will rise again. Samsung Electronics and SK Hynix are weighing the timing of breaking through the high point.

German investment bank Deutsche Bank upgraded its investment opinion on U.S. Micron Technology to ‘buy’ on the 18th (local time) and raised its target stock price from $65 to $85. Deutsche Bank said, “We were neutral on Micron due to excess inventory in the supply chain and weakness in macro end demand, but now that the worst of the downcycle has passed, considering aggressive production cuts by all suppliers.” Micron closed up 0.89% on the day.

As the outlook for Micron, known as the ‘semiconductor weather vane’, changed to optimism, the Philadelphia Semiconductor Index rebounded by 0.46%. NVIDIA (0.15%), AMD (0.87%), Intel (0.29%), and Lam Research (2.01%) also showed an upward trend.

It is expected that the stock price rally of Samsung Electronics and SK Hynix, the two top domestic semiconductor companies, will also receive strength in the second half of the year. Domestic stock market experts also consider the rise in semiconductor prices to be an established fact. DRAM spot prices are rebounding, and positive changes have recently been detected in customers’ purchasing stance toward memory semiconductors.

▲Samsung Electronics’ Pyeongtaek Semiconductor Plant.  (Photo = Samsung Electronics)

▲Samsung Electronics’ Pyeongtaek Semiconductor Plant. (Photo = Samsung Electronics)

Park Yoo-ak, a researcher at Kiwoom Securities, said, “We believe that the distribution inventory of DDR4 is starting to approach normal levels at the end of this year and the beginning of the year, leading to a rebound in DRAM fixed prices in the fourth quarter.” He added, “NAND is also expected to support the recovery in sales of mobile products such as the iPhone 15. “Thanks to this, a price rebound is expected, centered on some products,” he predicted.

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Seungwoo Lee, a researcher at Eugene Investment & Securities, said, “As Samsung’s memory production cuts accelerate, memory inventory, which has been exhausted, is expected to decrease significantly.” He added, “Semiconductor losses are expected to decrease due to the rise in average selling price (ASP) in the fourth quarter and the reversal of inventory valuation losses.” He said.

The stock prices of Samsung Electronics and SK Hynix, which are currently in the box range, are also expected to attempt to break through their previous highs following the announcement of provisional earnings for the third quarter. Samsung Electronics’ previous high was 73,600 won, and its current stock price is fluctuating around 70,000 won. SK Hynix is ​​also trading in the 119,000 won range, narrowing the gap with the previous high (129,000 won).

Performance also supports the stock price outlook. Samsung Electronics’ operating profit is expected to recover from 668.5 billion won in the second quarter to 2.8 trillion won in the third quarter. The operating profit forecast for the fourth quarter is expected to increase sharply to 4.1 trillion won. It is expected that performance will rise to a level similar to 4.3 trillion won in the fourth quarter of last year, showing signs of recovery. SK Hynix is ​​also expected to narrow its deficit to within 1 trillion won, from 2.9 trillion won in the second quarter to -1.7 trillion won in the third quarter and -700 billion won in the fourth quarter. The deficit is expected to be significantly reduced compared to the deficit of 1.9 trillion won in the fourth quarter of last year.

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Ko Young-min, a researcher at Daol Investment & Securities, said, “Contrary to concerns about the memory semiconductor industry in 2024, there is a good chance that it will go beyond a complete up cycle and into a bigger cycle than expected.” He added, “By the end of this year and the first half of next year, DDR5, “After the price rise continues due to short-term intensive demand for HBM3 and supplier dominance, the overall ASP upward trend is expected to continue in the second half of next year due to the price recovery of existing products,” he said.

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