Samsung Chip Profit Seen at 370 Trillion Won as DDR5 Prices Jump 5.5-Fold

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

1. Server DRAM Prices Surge 5.5-Fold Despite AI Slowdown Talk, Opening Era of 100 Trillion Won Quarterly Profit

- Key summary: Management at Samsung Electronics' Device Solutions division raised its operating profit outlook for this year to as much as 370 trillion won because memory demand is far stronger than the market had expected. As of the 15th of this month, the fixed contract price for 64-gigabyte DDR5 server modules (RDIMM) reached $1,500, 5.5 times the $272 recorded a year earlier, and TrendForce projected that third-quarter contract prices for server DRAM would rise 13% to 18% from the previous quarter. In the second quarter, Samsung Electronics posted revenue of 127.5 trillion won and operating profit of 89.2 trillion won in its semiconductor division alone, overtaking Nvidia to rank first in the world by quarterly operating profit. Third-quarter operating profit is forecast at 107.4 trillion won, which would mark the first time the company has topped 100 trillion won in quarterly operating profit since its founding.

2. Earnings Plus Added Shareholder Returns: The Time for Samsung and SK hynix Returns

- Key summary: With shares of Samsung Electronics and SK hynix, which had led the domestic stock market, stuck in a trading range for nearly two months, attention is turning to whether the third-quarter earnings season will mark the turning point for a rebound in chip stocks. Samsung Electronics is buying back about 15 trillion won of its own shares, while SK hynix plans to spend about 40 trillion won to purchase 24.07 million shares and cancel all of them. The funds Samsung Electronics is expected to use for shareholder returns this year total 90 trillion to 110 trillion won, with about 30 trillion won in third-quarter cash dividends taking shape first. Still, external variables such as high interest rates, exchange rates and geopolitical instability remain risks.

3. Trading Value Hits Year's Low on Cooling Sentiment as Foreign Investors Dump 12 Trillion Won

- Key summary: Foreign investors turned to what has been called a sell-Korea move, posting net sales of 11.9462 trillion won over six consecutive trading sessions from the 9th to the 16th. During that period, 93.52% of the net selling was concentrated in two stocks, Samsung Electronics at 6.2945 trillion won and SK hynix at 4.8775 trillion won, while a total of 7.4199 trillion won was rotated into names such as SK Innovation and financial shares. As a result, average daily trading value on the KOSPI fell to 20.968 trillion won this month, the lowest level this year and less than half the 50.347 trillion won recorded in June. The KOSPI closed at 6,717.97 on the 16th, up 1.37%, ending higher for the first time in five sessions and holding the 6,700 line.

4. Money Flowing Into AI Bonds Shakes Demand for U.S. Treasuries

- Key summary: Analysts say Big Tech companies in need of funding for artificial intelligence infrastructure are drawing investment money in the U.S. ultra-long bond market with high yields, pushing up U.S. Treasury yields. According to the London Stock Exchange Group, issuance of U.S. Treasuries with maturities of more than 20 years totaled $229.6 billion from January through August this year, down 26% from a year earlier, while issuance of dollar-denominated investment-grade corporate bonds jumped 78% to $263.7 billion. Corporate bond issuance by technology companies rose to $61.1 billion from January through August this year from $16 billion in 2024, and the sector's market share climbed to 24.1% from 6.1%, surpassing energy and finance. Meanwhile, the yield on the 30-year U.S. Treasury has moved in the 5.3% range this month, its highest level since 2007.

5. Holding Company Rules Tie Up Capital Raising, With Labor Disputes a Risk in Any Workforce Reshuffle

- Key summary: The government has presented a blueprint for large-scale investment in semiconductor fabrication plants in the Honam region, but concerns have emerged that holding company regulations could hold up the project. Under the Fair Trade Act, a second-tier subsidiary under a general holding company must hold a 100% stake in a domestic third-tier subsidiary, leaving SK hynix, a second-tier subsidiary of SK Inc., to secure 400 trillion won in investment funds on its own. That contrasts with SK Telecom (017670.KS), which set up a separate entity, SK Horizon, and secured more than 3 trillion won by teaming up with Kohlberg Kravis Roberts and others. The ruling party has introduced an amendment that would lower the stake requirement for jointly funded corporations in advanced industries outside the greater Seoul area to 50% or more, but deliberations in the National Assembly have been slow.

6. [Investment Window] Risk Appetite Holds Even as Cash Rises

- Key summary: According to the State Street Risk Appetite Index, institutional investors' risk appetite recovered in August from July, and demand for risk assets stayed in positive territory for a fifth straight month. The most notable shift in asset allocation was a move from bonds into cash, with equity holdings at the end of August 32.5 percentage points higher than bond holdings, far above the long-term average of 20 percentage points. Money became more concentrated in the information technology sector toward the end of August while most other sectors saw selling, and funds flowed into Korea and Taiwan, where earnings outlooks are favorable. The won strengthened on the back of semiconductor exports, inflows into Korean equities, a current account surplus and hawkish messaging from the Bank of Korea.