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.