[R&E] Semiconductors Continue Super Strong Trend Centered on HBM... SK hynix Operating Profit Surges +137%

[R&E: Research & Epoch]
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Market Overview: Key Indicators and Trends

The New York stock market closed mixed yesterday, centered on technology stocks, amid differing interpretations of Big Tech companies' earnings reports and future investment plans. Microsoft (NASDAQ: MSFT) reported strong earnings that exceeded expectations, but its stock price plummeted -10.2% as short-term profitability concerns were reflected in its aggressive capital expenditure plan ($37.5 billion spent in the quarter) to preempt mid-to-long-term expansion across the AI stack. On the other hand, Meta Platforms (NASDAQ: META) rose +10.4% backed by solid earnings, suggesting an intensifying divergence in corporate value between companies where AI-related spending leads to monetization and those where it does not.

On the previous trading day, the domestic stock market showed strength with the KOSPI surpassing the 5,200 mark for the first time in history, driven by expectations of an improvement in the semiconductor industry, while the KOSDAQ recorded a +2.73% increase, outperforming the KOSPI's growth rate. Institutional buying through the KOSDAQ 150 ETF particularly led the index rise. Today's domestic stock market is centered on the overwhelming earnings momentum of memory semiconductor companies announced on the previous trading day. Driven by strong demand for AI servers and HBM, SK hynix saw its operating profit surge by +137% year-on-year, and Samsung Electronics is also driving an earnings recovery with the maximized effect of memory price hikes, leading to expectations that confidence in industry improvement will spread across the broader market.

Key Issues and Insights by Industry

The IT and high value-added semiconductor sector maintains a super strong trend based on preempting the HBM market and a surge in memory prices. SK hynix recorded high profitability with a DRAM operating profit margin of 67% based on its HBM market leadership, and its HBM shipments are expected to show an increase rate of nearly 70% in 2026 as well. Samsung Electronics is also accelerating its earnings improvement based on its pricing power in the commodity memory market, with its DRAM average selling price (ASP) surging over 40%. In the non-memory sector, Daeduck Electronics achieved a quarterly turnaround to surplus by recording KRW 70.6 billion in FC-BGA sales, boosted by expanding demand for optical modules and controllers for data centers. This proves that the structural change of building high-performance computing environments is driving the growth of the PCB industry.

In the mobility and heavy industry sector, intensive structural reorganization and concentrated future investments for long-term growth are taking place simultaneously. Hyundai Motor saw its operating profit plummet by -40% year-on-year due to one-off costs and tariff burdens in the fourth quarter, falling short of market expectations, but it clarified its transition into an AI-based platform company by announcing plans to invest a total of KRW 17.8 trillion intensively in future technologies such as robotics and SDV in 2026. Tesla (NASDAQ: TSLA) is also accelerating its transformation into a robot platform company by presenting a bold strategy to replace its Model S/X production lines with production lines for the humanoid robot 'Optimus'.

On the other hand, the secondary battery sector is taking a direct hit from the industry slowdown. LG Energy Solution recorded an operating loss of KRW 122 billion in the aftermath of inventory adjustments by customers of its US joint venture, and POSCO FUTURE M also saw its deficit widen due to the reflection of one-off costs such as inventory losses and impairment losses on cathode materials. However, it is positive that LG Energy Solution moved to defend its earnings by securing growth engines in the non-EV field, such as its ESS sales surging 137% compared to the previous quarter. Meanwhile, POSCO Holdings experienced a -98.3% year-on-year plunge in operating profit due to the reflection of large-scale one-off costs, but it laid the foundation for restructuring its earnings in 2026 by completing the sale of its Zhangjiagang plant in China, which had been a chronically loss-making asset.

Market Signals

• Strong Memory Semiconductor Prices: SK hynix's fourth-quarter average selling prices for DRAM and NAND rose by +20.0% and +25.0%, respectively, driven by AI server demand, confirming that the memory upcycle is unfolding stronger than expected.

• Large-Scale Investment in Future Mobility: Hyundai Motor expressed a strong will for growth through its plan to inject a total of KRW 17.8 trillion into future technologies such as robotics and SDV in 2026.

• Trading Companies Driven by Energy Sector: POSCO International's fourth-quarter operating profit increased by +83.6% year-on-year, exceeding market expectations, due to the E&P sector and the effect of production increases at Australia's Senex. Its dividend attractiveness is also highlighted as it achieved an annual shareholder return rate of 51.3%.

Epoch View: Investment Implications

Today's market has entered a phase where separating the wheat from the chaff in the advanced technology sector is becoming more sophisticated. The overwhelming price recovery trend in the memory semiconductor market and the demand for AI infrastructure construction are key drivers for raising the target stock prices of large manufacturers such as Samsung Electronics and SK hynix. In particular, continuous interest is essential for companies that will maintain a monopolistic position in the future by securing HBM4 quality and preempting next-generation packaging technologies.

On the other hand, for the secondary battery and materials sector, which has experienced an EV market slowdown and earnings shock, it is highly likely that the timing of earnings normalization will be delayed to 2027. In these sectors, the ability to secure liquidity, such as LG Chem's plan to utilize its LGES stake, and the willingness to dispose of non-profitable assets, such as POSCO Holdings' sale of its Chinese plant, are prerequisites for corporate value recovery.

As market interest shifts from EV sales to humanoid robots and autonomous driving technologies, a long-term approach in the mobility sector is valid for Hyundai Motor, which holds future technology investment scale and specific roadmaps rather than short-term earnings, and LG Energy Solution, which is pursuing a robotics partnership. In addition, consumer goods companies with low sensitivity to changes in the external environment, such as Samyang Foods, whose export share reaches 80% and which continues high growth in the US (+58.6%) and European (+86.7%) markets, are also expected to contribute to securing portfolio stability.

This content was written through News Epoch's proprietary AI algorithm that analyzes public data from research centers of major domestic securities companies in real-time.
Please note that it is an objective summary based on collected data and does not constitute a solicitation or recommendation for investment in specific stocks.