[R&E] SK Hynix and Samsung Electronics Weaken Amid KOSPI's 5.8% Drop, Driven by US Inflationary Pressure and Semiconductor Profit-Taking

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

Global Market Brief

Last Friday, the New York stock market closed slightly lower amid the release of inflation data and profit-taking in technology stocks. The Dow Jones Industrial Average recorded 51,876.11pt (-0.09%), the S&P 500 Index recorded 7,354.02pt (-0.05%), and the NASDAQ Composite recorded 25,297.62pt (-0.24%).

The sustained inflationary pressure, evidenced by the US Personal Consumption Expenditures (PCE) price index for May rising 4.1% year-on-year, weighed on the market. In particular, the Philadelphia Semiconductor Index fell -5.29% to 13,203.57pt, and Micron dropped -6.69%, as the correction in the semiconductor sector led the index decline. West Texas Intermediate (WTI) crude oil closed down -3.74% at $69.23 per barrel last Friday, as the US and Iran agreed to resume merchant ship transit through the Strait of Hormuz. This suggests that the easing of geopolitical risks has relieved supply anxiety in the crude oil market.

Domestic Market Overview

Last Friday, the domestic stock market closed lower, weighed down by the global tech stock correction and heavy foreign selling. The KOSPI index recorded 8,411.20pt, down -5.81% from the previous trading day. Market volatility expanded significantly due to the intraday plunge, triggering sell sidecars and circuit breakers. The KOSDAQ index also closed down -4.10% at 851.37pt.

Foreign investors continued their net selling streak in the KOSPI market for 6 consecutive days, offloading a cumulative 17.3 trillion won. Global interest rate instability and the trend of the weak won are the causes accelerating the outflow of foreign funds. The dollar-won exchange rate has risen by more than 2% over the past month, remaining near its highest level of the year. In the Seoul foreign exchange market last Friday, it closed at 1,534.8 won, down 8.2 won from the previous trading day, but the burden of the persistently high exchange rate acted as the backdrop for foreign selling.

Key Industry Issues and Insights

Semiconductors: Fundamentals Remain Solid Amid Short-Term Overheating Resolution Phase

Amid concerns over short-term overheating in the global semiconductor market, the stock prices of leading domestic semiconductor companies recorded a downward trend last Friday. Samsung Electronics (KOSPI: 005930) fell -5.0% last Friday, and SK Hynix (KOSPI: 000660) dropped -4.9%. This is a synchronization effect following the correction of major semiconductor companies, such as Micron, in the US stock market.

However, analysis suggests that the fundamentals of the semiconductor industry remain solid. Micron reported fiscal Q3 (FY3Q26) revenue of $41.46 billion, a 346% increase year-on-year, and recorded a Non-GAAP Gross Margin of 84.9%, beating market consensus by 20% and 23%, respectively. In particular, it secured at least $100 billion in revenue visibility through 2030 via 16 long-term supply agreements (SCA). SK Hynix is also projected to achieve Q2 revenue of 87.1 trillion won, a 292% increase year-on-year, with operating profit soaring 638% year-on-year to 67.6 trillion won. Furthermore, the company plans to raise 45 trillion won through an ADR listing on the US NASDAQ on July 10, which will be fully invested in facilities. This implies that the short-term stock price correction is merely profit-taking due to valuation burdens, while the structural growth in artificial intelligence (AI) memory demand, led by High Bandwidth Memory (HBM), remains valid.

Secondary Batteries and Energy Storage Systems (ESS): Demand for Portfolio Diversification Amid Oversupply Concerns

The domestic secondary battery sector underwent a sharp correction last Friday, compounded by slowing electric vehicle (EV) demand and oversupply concerns. LG Energy Solution (KOSPI: 373220), Samsung SDI (KOSPI: 006400), and SK Innovation (KOSPI: 096770), the combined stock price of the three major battery companies fell -17.4% over the week, underperforming the KOSPI by -10.4%p. Materials companies such as POSCO Future M (KOSPI: 003670) (-19.5%) and EcoPro BM (KOSDAQ: 247540) (-21.1%) also recorded a weekly decline of -19.5%.

This concurrent decline was driven by automakers halting EV development and the repurposing of battery facilities. In fact, the Ohio joint venture plant of LG Energy Solution and Honda has withdrawn its EV battery mass production plan and converted its purpose to mass-producing ESS batteries. Honda decided to acquire the asset for $2.5 billion and suspend the development of three EV models. This substantiates the oversupply concern that actual demand (1,360GWh) will fall significantly short of the global EV battery capacity (4,480GWh) in 2026. Accordingly, Samsung SDI's Q2 revenue is expected to increase by 17% year-on-year to 3.7 trillion won, but is projected to record an operating loss of 75 billion won, continuing its deficit from the first quarter. However, the growth of the global ESS market driven by carbon neutrality policies can be an alternative. The cumulative new global ESS installations from January to May 2026 stand at 113.2GWh, an increase of 20% year-on-year, maintaining a growth trend. This suggests that battery companies need to accelerate structural improvements by diversifying their EV-centric portfolios toward ESS.

Market Signals

• Exchange Rate at Year's Highest Level: Last Friday, the dollar-won exchange rate closed at 1,534.8 won, down 8.2 won from the previous day, but remained near the highest level of the year.

• Large-Scale Foreign Outflow: Foreign investors recorded net selling in the KOSPI market for 6 consecutive trading days, offloading a cumulative 17.3 trillion won.

• Slight Increase in Memory Spot Prices: The spot price of DDR5 16G recorded $46.733 last Friday, rising 1.59% over the week, proving strong demand for high-spec memory.

• Refining Margin Improvement: The Singapore complex refining margin recorded $15.1 per barrel in the 4th week of June, showing strength compared to the previous week.

• Securing Order Backlog: The order backlog for Hyundai Rotem (KOSPI: 064350)'s Defense Solution division recorded approximately 10 trillion won, heralding stable revenue growth in the defense sector moving forward.

Epoch View: Investment Implications

The sharp decline in the domestic stock market last Friday was the combined result of persistent US inflationary pressure and valuation burdens on global tech stocks. In particular, the large-scale outflow of foreign funds and the burden of the high exchange rate acted as key factors weakening the physical strength of the domestic stock market. However, as seen in the favorable earnings forecast for SK Hynix and the long-term contract achievements of Micron, the structural growth potential of the semiconductor industry remains intact. On the other hand, the secondary battery industry is passing through a painful structural improvement phase, such as repurposing to ESS amid an oversupply of EVs. Ultimately, in a phase of expanding short-term market volatility, a strategy of compressing portfolios around leading stocks that possess both strong industry fundamentals and cash-generating capacity is required. It is valid to approach the market with a defensive asset allocation strategy until external risks are resolved and supply-demand tangles are untangled.

This content was generated by News Epoch's proprietary AI algorithm, which tracks and analyzes public data from research centers of major domestic securities firms and global financial media in real time. We disclose that this is an objective summary based on collected data and does not constitute an investment solicitation or recommendation for specific stocks.