Samsung Memory Boom: Chips Soar, Smartphones Suffer

*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an "artificial intelligence (AI)-based personalized news recommendation and summarization service" developed with support from the Korea Press Foundation. It selects and provides six customized news items by reader type.

1. Memory Margin at 83%…Quarterly 100 Trillion Won First Reaffirms 'Megacycle'

- Key Summary: Samsung Electronics' memory division recorded operating profit exceeding 100 trillion won in the second quarter alone, achieving the industry's highest margin of 83%, overtaking Micron (81%). Samsung Electronics' DRAM production capacity stands at 650,000 to 700,000 wafers per month—twice that of Micron (about 300,000) and more than 20% higher than SK hynix (000660.KS) (about 550,000)—securing its position as a "Swing Producer" that has a decisive influence on memory prices and supply-demand flows. In addition, after becoming the world's first to mass-produce sixth-generation high bandwidth memory (HBM) HBM4, it also delivered seventh-generation HBM4E samples first, realizing a technological gap. Meanwhile, in the finished products (DX) division, the surge in memory prices has boomeranged, with the memory share of smartphone costs rising from 14% in the first quarter of last year to a recent 40%, causing second-quarter operating profit to plunge below 1 trillion won.

2. Samsung's Q2 Operating Profit Tops 100 Trillion Won for First Time, 'World No. 1'

- Key Summary: Samsung Electronics recorded revenue of 171 trillion won and operating profit of 89.4 trillion won on a consolidated basis in the second quarter, surging 129.3% in revenue and 1,810.3% in operating profit from a year earlier, setting a record high for the third consecutive quarter. Converted into dollars, this amounts to about $58.55 billion, surpassing both Nvidia's best performance ($53.5 billion) and Apple's best performance ($50.8 billion). According to FnGuide, over the past month, the consensus (forecast) for Samsung Electronics' third-quarter operating profit reached 110 trillion won and the fourth quarter 120.8 trillion won, with securities firms forecasting quarterly operating profit to top 140 trillion won next year. Chairman Jay Y. Lee is continuing his efforts to add large-scale supply contracts for the foundry (semiconductor contract manufacturing) business by attending the "Sun Valley Conference" in Idaho, U.S.

3. Amid Claims of a "Market Reliant on Price Rather Than Volume," JP Morgan Sees "Bargain-Buying Opportunity"

- Key Summary: A U.S. Treasury confidential report warned that if AI monetization fails, a shock comparable to the dot-com bubble could spread to data center construction financing, private credit markets, and semiconductor manufacturers, and Morgan Stanley also recommended reducing semiconductor stock holdings. Countering this, JP Morgan forecast that global semiconductor stock prices would set record highs in the second half, arguing that new production facilities are difficult to secure until 2028 and that chronic supply shortages increase pricing power. Along with this, the data center investment scale of the five big tech companies this year reaches $848 billion, and semiconductor demand has increased more than fivefold since 2023. Experts forecast that since the strong second-quarter results were already expected, the direction of the AI market will be determined through earnings releases from major companies such as TSMC and ASML running through mid-July.

4. Liquidity Concentrated Only in Stocks…Balance of Rates, Exchange, and Funds Broken

- Key Summary: Even though Korea's current account surplus in April this year reached $28.29 billion, semiconductor-driven market concentration is simultaneously causing the won's value to fall and market interest rates to rise. Foreigners net sold 149.0464 trillion won in the securities market in the first half of this year alone, recording an outflow scale six to seven times that of the global financial crisis (22.929 trillion won in the first half of 2008) and the COVID-19 pandemic (21.457 trillion won in the first half of 2020). As a result, deposits at secondary financial institutions such as agricultural cooperatives, Saemaul Geumgo, and credit unions have decreased by more than 15.2 trillion won this year, and as of the end of March, the scale of non-performing loans among small and mid-sized enterprises reached 10.5 trillion won, the highest since March 2016. The KOSPI showed volatility of 3% or more on 41 of 125 trading days this year, repeating sharp rises and falls on roughly one out of every three days.

5. 500 Billion Won Invested in Data Structuring…Marketing Design From 3 Days to 40 Minutes

- Key Summary: Hyundai Card equipped its self-developed AI platform "UNIVERSE" with "Mother AI" and "Allocation AI," shortening the marketing design period from the previous three days to 20 to 40 minutes. Behind such achievements lies a long-term strategy of investing a total of more than 1 trillion won in AI and data science after declaring "Digital Hyundai Card" in 2015, of which 500 billion won was intensively invested in data structuring. Meanwhile, Hyundai Card has established a "PDI tag" system that converts card payment data into customer tendencies and behavioral characteristics, and Mother AI combined even consumption data that appeared to have low relevance to achieve marketing response rates up to six times higher than before. Hyundai Card's membership grew from 11.04 million in 2022 to 12.67 million last year, and its personal credit sales share also expanded from 16% to 17.5%.

6. "The Korean Market Is Squid Game" — A Chilling Warning

- Key Summary: As foreign profit-taking overlapped with a semiconductor-dependent stock market, the KOSPI plunged 4.91% on the 7th, and as volatility grew extreme following the introduction of leveraged exchange-traded funds (ETFs), foreign media raised the warning that "the Korean market is coming to resemble 'Squid Game.'" Foreigners net sold 2.93 trillion won worth in the securities market that day, and, selling off about 171.43 trillion won in the KOSPI alone this year, continued their selling streak for 13 consecutive trading days. In addition, the credit spread of "AA-" grade corporate bonds (the interest rate gap between three-year corporate bonds and three-year government bonds) widened to 0.692 percentage points, the largest this year, and delinquencies among small and mid-sized enterprises are surging amid rising interest rates. Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol said regarding leveraged ETFs being cited as one cause of stock price volatility, "We are consulting on supplementary measures."