[R&E] KOSPI Falls on Foreign Selling, Samsung Electro-Mechanics Fires Signal Flare for Semiconductor Leap with Massive Order

[R&E: Research & Epoch] This is News Epoch's signature report that provides a perspective on a new era of investment by integrating and analyzing global financial data and domestic securities firm research.

Global Market Brief

The New York stock market closed higher the previous day, driven by a drop in international oil prices following progress in Iran nuclear negotiations and expectations for major companies' earnings. The Dow Jones Industrial Average rose 1.31% to 50,009.35 points, and the S&P 500 Index climbed 1.08% to 7,432.97 points. The tech-heavy NASDAQ Composite Index went up 1.54% to 26,270.36 points, and notably, the Philadelphia Semiconductor Index surged 4.49%, heightening expectations for a recovery in the semiconductor industry.

This upward trend was supported by former President Trump's remark that end-of-war negotiations with Iran are in the final stages, causing WTI crude oil to plunge 8.8% to $98.3 per barrel. The drop in oil prices eased inflationary pressures, pulling the 10-year US Treasury yield down by over 10 basis points and stimulating risk appetite.

Nvidia's (NASDAQ: NVDA) better-than-expected first-quarter earnings announcement (revenue of $81.62 billion, estimated $79.2 billion) and Micron's remarks on strong memory demand also had a positive impact on the overall semiconductor sector. Meanwhile, in the April Federal Open Market Committee (FOMC) minutes, the majority of members mentioned that additional tightening might be necessary if inflation persistently exceeds 2%, but these concerns were somewhat alleviated by the decline in oil prices.

Domestic Market Overview

The domestic stock market closed lower on the previous trading day as foreign investors continued their selling streak for the 10th consecutive session. The KOSPI fell 0.86% to 7,208.95 points, and the KOSDAQ dropped 2.61% to 1,056.07 points. In particular, news of a breakdown in negotiations and a declaration of a general strike by the labor union of Samsung Electronics (KOSPI: 005930) weighed on the overall market in early trading. Foreigners led the index decline by recording net sales of 3 trillion won in the KOSPI market.

Nevertheless, the rise in the Philadelphia Semiconductor Index and news of strong earnings and massive orders from major domestic companies served as factors limiting the extent of the decline. KOSPI night futures rose by around 4.6% and the MSCI South Korea ETF climbed 3.5%, reflecting expectations for the domestic stock market today. The won/dollar exchange rate closed at 1,497.0 won, down 10.5 won from the previous day, moving in tandem with the weak dollar trend.

Key Industry Issues and Insights

The semiconductor industry is securing new growth momentum thanks to the expansion of AI investments by global tech companies. Samsung Electro-Mechanics (KOSPI: 009150) is a prime example. Samsung Electro-Mechanics disclosed a silicon capacitor supply contract worth 1.557 trillion won. This is scheduled to be supplied to a large global company spanning from 2027 to 2028. Silicon capacitors are advantageous for thinning compared to conventional multi-layer ceramic capacitors, making them an essential component for high-performance semiconductor packages. This massive order proves that Samsung Electro-Mechanics has secured a technological edge in the AI and high-performance computing markets.

Accordingly, the assumed increase rate for the average selling price of Samsung Electro-Mechanics' multi-layer ceramic capacitors for 2027 was revised upward from the previous 14.0% to 22.6%, and the assumption for the average selling price increase of package solutions was also raised from 23.6% to 31.5%. Competitor Taiyo Yuden's announcement of a 6~13% price hike for multi-layer ceramic capacitors and Murata's mention of halting additional capacity allocation for IT applications also illustrate a supplier-dominated market environment.

Reflecting such positive factors, the estimated operating profit for Samsung Electro-Mechanics in 2027 was presented at 3.0663 trillion won, an upward revision of 28% compared to the previous estimate, and the target stock price was raised from 1.6 million won to the 1.7 million won level. This clearly demonstrates the enhanced competitiveness and improved profitability of South Korean companies within the advanced semiconductor components market.

Semiconductor materials company Duksan Hi-Metal (KOSDAQ: 077360) recorded separate basis revenue of 42.6 billion won in the first quarter of 2026, a 62.8% increase year-on-year, achieving its highest quarterly revenue. However, due to a surge in the prices of key raw materials such as silver and tin, operating profit fell by 26.7% year-on-year to 2.3 billion won, slowing down profitability. This reveals the impact of raw material price volatility on corporate performance.

However, Duksan Hi-Metal set out to improve profitability by applying a raw material price linkage system and raising the prices of some product families starting in March. Accordingly, in the second quarter of 2026, it is expected to recover to an operating profit margin of 12.1%, recording revenue of 53.0 billion won (a 72.4% increase year-on-year) and operating profit of 6.4 billion won (a 39.1% increase year-on-year). In addition, its market share within a Taiwanese FC-BGA company that primarily supplies products for GPUs/ASICs is estimated to have roughly doubled compared to before, strengthening its foothold in the high-performance semiconductor market.

Meanwhile, Duksan Tecopia (KOSDAQ: 317330) saw its first-quarter revenue rise 61.4% year-on-year to 39.1 billion won, but recorded an operating deficit of 10.4 billion won on a consolidated basis due to the reflection of approximately 15 billion won in losses from its secondary battery division. In the semiconductor and OLED divisions, it achieved an operating profit of 900 million won on a separate basis, maintaining the robustness of its core business. This illustrates a situation where the initial investment costs of a new business are pressuring overall performance.

The Energy Storage System (ESS) market continues its global growth, but regional disparities are worsening. In April 2026, new global ESS installations reached 17.7GWh, up 18.3% year-on-year. In particular, 8.5GWh of standalone battery energy storage systems were newly installed, representing a 67% increase year-on-year. On the other hand, the new installation volume of utility-scale ESS in the US for April dropped by 86% year-on-year to 0.4GWh.

These regional differences are influenced by geopolitical factors, such as the European Investment Bank's decision starting in May to exclude major Chinese companies from renewable energy and ESS projects funded by EU capital. This implies a reconsideration of China-centric supply chains and the possibility of acting as an opportunity factor for non-Chinese suppliers, including South Korea. The expansion of electric vehicle penetration has had the effect of reducing China's transport fuel demand by an average of 430,000 barrels per day in 2024, and China is accelerating its energy transition by mainly utilizing renewable energy sources such as solar and wind for additional power supply.

In the shipbuilding industry, HD Korea Shipbuilding & Offshore Engineering (KOSPI: 009540) reported solid earnings. First-quarter revenue rose 20.2% year-on-year to 8.14 trillion won, and operating profit increased 57.8% to 1.36 trillion won, beating market expectations by 14.8%. This proves the improvement in profitability resulting from high-value-added vessel orders and enhanced construction efficiency. The target stock price was revised upward from 530,000 won to 580,000 won, revealing structural improvements and a stable growth trend in the shipbuilding industry.

Market Signals

• Foreign Supply and Demand: Foreign investors continued a net selling streak of 3 trillion won in the KOSPI market for 10 consecutive trading days.

• WTI Crude Oil: Closed at $98.3 per barrel, down 8.8% from the previous day, amid expectations for end-of-war negotiations between the US and Iran.

• Philadelphia Semiconductor Index: Surged 4.49% in the US stock market the previous day, contributing to improved investment sentiment for domestic semiconductor-related sectors.

• Global ESS Market: New installations in April increased 18.3% year-on-year to 17.7GWh, but US utility-scale ESS dropped by 86%, revealing regional disparities in the market.

• Raw Material Prices: A surge in silver and tin prices impacted the short-term profitability of some materials companies, such as Duksan Hi-Metal.

Epoch View: Investment Implications

The domestic stock market fell today due to internal instability factors such as the Samsung Electronics union issue and foreign selling, but the positive flow of the global semiconductor industry conditions and the solid earnings and growth momentum of major companies such as Samsung Electro-Mechanics and HD Korea Shipbuilding & Offshore Engineering supported the market downside.

In particular, Samsung Electro-Mechanics' massive silicon capacitor order clearly shows that the demand for high-performance semiconductors is driving the growth of specific component markets. The global ESS market maintains its growth trend, but geopolitical factors are accelerating the restructuring of supply chains and creating new opportunities. Even amidst uncertainty, the technological leadership and market expansion strategies of core companies function as solid growth engines, which signifies the structural improvement and long-term competitiveness enhancement of domestic industries.

This content was generated using News Epoch's proprietary AI algorithm, which tracks and analyzes public data from major domestic securities firm research centers and global financial media in real-time. It is an objective summary based on collected data and does not constitute a solicitation or recommendation to invest in any specific stock.