Will Samsung Hit 120,000 Won and SK Hynix 500,000 Won? Should You Buy the Semiconductor "Top Two" Now? [Practical Investment]

Semiconductors Lead KOSPI's Rally: Samsung at 90,000 Won, SK Hynix at 430,000 Won
Big Tech Investment Surge, Rising DRAM Prices, and Foreign Inflows
Entering a Supercycle vs. Historic Overvaluation and Trade Tensions

The market's interest in semiconductors is heating up. This sector has emerged as the driving force behind the KOSPI's record-breaking rally. The two leading semiconductor companies, Samsung Electronics and SK Hynix, have both reached new all-time highs, fueled by a combination of positive factors, strong earnings, and favorable supply-demand dynamics. While the securities industry is awash with optimistic forecasts for a semiconductor supercycle, there are also growing concerns about historical overvaluation. With the US-China trade conflict reigniting, investors are left wondering how best to respond.

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Samsung at 90,000 won, SK Hynix at 430,000 won... Semiconductors Take the Wheel of the KOSPI

The KOSPI, which has been on a steep upward trajectory recently, broke through the 3,600 mark on October 10, setting a new record. The driving force behind this surge has been the semiconductor sector. The 'KRX Semiconductor' index, which tracks 36 major domestic semiconductor stocks, jumped 38.87% since September 2025. This was the largest increase among all indices announced by the Korea Exchange. During this period, Samsung Electronics and SK Hynix soared by 33.86% and 54.28%, respectively, propelling the index higher. Foreign investors, who poured 11.98 trillion won into the KOSPI market since last month, bought 8 trillion won worth of Samsung Electronics (the top net purchase) and 1.82 trillion won worth of SK Hynix (the second highest net purchase), driving the charts upward.

This concentration on semiconductors is closely linked to expectations for strong earnings. Since September 2025, spot prices for DRAM have surged, leading to upward revisions in earnings forecasts for both Samsung Electronics and SK Hynix. Samsung Electronics posted a provisional operating profit of 12.1 trillion won in the third quarter of this year, up 31.81% from the same period last year, marking its highest quarterly profit in over three years. SK Hynix is also expected to exceed market expectations with operating profit in the 12 trillion won range. Experts explain that as major memory manufacturers focus on expanding production capacity for high-performance DRAM for servers, the supply of general-purpose DRAM has decreased, driving up prices.

Lee Jongwook, a researcher at Samsung Securities, stated, "There is concrete evidence that the rise in DRAM prices has passed an upward inflection point, driven by simultaneous increases in demand for high-bandwidth memory (HBM) and general-purpose DRAM." He raised his operating profit estimate for Samsung Electronics this year by 6% to 34 trillion won, and for SK Hynix by 12% to 41 trillion won.

Recently, large tech companies have been racing to sign massive semiconductor and data center contracts worth hundreds of trillions of won, further fueling investor sentiment. Previously, US semiconductor company AMD signed a deal to supply OpenAI with AI accelerators requiring a total of 6GW of power by 2029. On October 9, it was reported that Nvidia will invest $2 billion (2.8 trillion won) in xAI. This has sent positive signals to SK Hynix and Samsung Electronics, who are supply partners for HBM to both Nvidia and AMD.

Rising Expectations for a Semiconductor Supercycle... Is There a Bubble Risk?

With a series of positive developments, the securities industry is issuing a wave of rosy outlooks for the semiconductor sector. As major US AI companies ramp up investments, the Korean government, now in its second year in office, is also expected to drive policy by increasing the 2026 research and development (R&D) budget by 19% compared to this year, to 35.3 trillion won. Amid expectations for a semiconductor supercycle, materials, parts, and equipment companies such as CMTX and Green Optical are preparing to list on KOSDAQ.

Above all, expectations are high for the two giants, Samsung Electronics and SK Hynix. Sohn Injun, a researcher at Heungkuk Securities, said of Samsung Electronics, "The estimated capacity share (based on wafer input) for 2026 is 32% for DRAM and 30% for NAND, making it the biggest beneficiary of the memory supercycle," raising the target price from 100,000 won to 120,000 won. Jung Minkyoo, a researcher at SangSangIn Securities, commented on SK Hynix, "Although intensified competition is expected after the introduction of HBM4 mass production wafers at the end of the year, the company is likely to maintain its leadership in technology and yield," raising the target price from 370,000 won to 500,000 won.

Despite the perfect combination of positive factors, strong earnings, and favorable supply-demand, there are significant warnings against chasing the rally. Alongside concerns about an AI bubble, the recently reignited US-China trade conflict risk could provide grounds for a correction in the semiconductor sector, which is already burdened by high valuations. The current 12-month forward price-to-book ratio (PBR) for the domestic semiconductor sector stands at 1.56, surpassing the 1.44 recorded during the 'big cycle' of 2017-2018.

Kim Seongno, a researcher at BNK Investment & Securities, stated, "Current semiconductor valuations have reached historically high levels. Rational investors are bound to feel burdened by chasing the rally. Given that the relative strength of semiconductors compared to the KOSPI is now on par with that of US growth stocks, it will not be easy for semiconductors to continue outperforming the KOSPI."

Kim Kyunghwan, a researcher at Hana Securities, explained, "The rare earth export controls announced by China on October 9 are the strongest measures since April and closely mirror the semiconductor regulations the US has imposed on China. The ongoing confrontation between the two countries over semiconductors and rare earths is complicated by accumulated preparations and justifications on both sides, competition to foster emerging manufacturing industries, and the interests of major countries, making a 'big deal' agreement difficult and exposing the sector to repeated uncertainties."