👩🍳 How we use AI at Tech in Asia, thoughtfully and responsibly.
🧔♂️ A friendly human may check it before it goes live. More news here
🧔♂️ A friendly human may check it before it goes live. More news here
S Korean memory chip stocks seen rebounding on Mideast easing
A top-performing emerging markets fund says South Korean memory chip stocks could rise further if tensions in the Middle East ease, citing still-low valuations after a recent rally.
Causeway Capital Management said Samsung Electronics and SK Hynix may benefit most if the Iran conflict deescalates.
The call follows a March selloff in which foreign investors sold US$17 billion of Samsung and SK hynix shares.
The fund also added energy stocks as a hedge against its tech exposure.
🔗 Source: Bloomberg
🧠 Food for thought
Implications, context, and why it matters.
South Korea’s chip dominance rests on a precarious energy supply chain
- Samsung Electronics and SK Hynix shares slid as investors priced in South Korea’s exposure to energy disruptions 1.
- South Korea buys about 70% of its crude oil from the Middle East, and most of it moves through the Strait of Hormuz 1.
- Semiconductor production consumes large amounts of power. A planned chip complex in Yongin is expected to need about 16 gigawatts, near 17% of the country’s peak electricity demand 1.
- Samsung and SK Hynix account for almost 40% of South Korea’s stock market value, so any hit to energy access can jolt the broader index 1.
The AI boom is colliding with geopolitical reality
- The sell-off came even as the memory market was described as favoring sellers. Samsung Electronics and SK Hynix reportedly offered first-quarter server Dynamic Random-Access Memory (DRAM) prices 60–70% above Q4 levels to large customers amid AI demand 2.
- A new supply chain pressure is taking shape. The global AI build-out relies on memory chips made in a country with limited energy security 1.
- Market swings tie AI infrastructure costs more closely to global energy conditions, which could push cloud providers to rethink supplier concentration 1.
- Before the conflict, one analysis found earnings-per-share forecasts rising faster than share prices, which made valuations look lower on forward earnings even after the rally 3.