By Jihoon Lee, Yena Park and Heekyong Yang
SEOUL, May 27 (Reuters) – SK Hynix topped $1 trillion in market value for the first time on Wednesday, joining its memory chip rivals Samsung Electronics and Micron Technology in reaching the milestone on an AI-driven rally.
Shares of SK Hynix closed the session up 9.3%, after rising as much as 14.9% during the session to take the South Korean chipmaker’s market value to a record 1,680 trillion won ($1.12 trillion) and propel the country’s benchmark KOSPI index to a record high.
Domestic rival Samsung surpassed $1 trillion in market value for the first time on May 6, while U.S.-listed Micron did so on Tuesday.
Strong demand for high-end memory chips used in AI chipsets like those designed by Nvidia has tightened supply and driven up prices, benefiting the world’s biggest makers of the semiconductors.
Memory chip prices doubled in the first quarter alone from the previous period and are forecast to increase by up to 63% in the current quarter due to AI data centre demand that has constrained supplies for smartphones, laptops and automobiles and helped top memory chipmakers report record profits.
There are only three Asian companies that have joined the $1 trillion club, including TSMC. South Korea has become the first country other than the U.S. to have more than one company reach that market value.
HIGH VALUATION TARGETS
Led by the two chipmakers, South Korea’s KOSPI stock index gained 2.3% at 8,229.70, after rising as much as 5.1% to an all-time high of 8,457.09, with the sharp gains triggering a “sidecar” curb that temporarily halted algorithmic trading.
With Wednesday’s rally, Samsung and SK Hynix accounted for half of the index by market capitalisation. The KOSPI, which has emerged as the world’s best performer in a global AI boom, has risen 95% so far this year, after rising 76% last year.
“We expect memory chip demand to continue exceeding supply by 2028 to keep price levels high,” Kim Young-gun, an analyst at Mirae Asset Securities in Seoul, said in a report, raising target prices for SK Hynix and Samsung by 18.8% and 14.6% to 3.8 million won per share and 550,000 won, respectively.
SK Hynix shares closed at 2.243 million won on Wednesday.
Samsung shares also rose as much as 8%, before closing 2.7% higher at a record close of 307,000 won, as unionised workers in South Korea voted to approve a tentative wage deal, averting a strike that threatened global chip supplies.
UBS said in a report on Tuesday that it had more than tripled its target price for Micron, citing “the structural changes AI has driven to the entire memory complex.”
Samsung shares have risen 149% so far this year, while SK Hynix shares are up 215% and Micron shares are up 245%.
ETF INTEREST
In recent weeks, U.S. retail investors have invested billions of dollars into a new exchange-traded fund (ETF) that gives them exposure to Samsung and SK Hynix.
The first South Korean single-stock leveraged ETFs linked to Samsung and SK Hynix surged on their market debut on Wednesday, posting double-digit gains as semiconductor shares rallied.
“Leveraged ETF buying leads to futures buying, raising futures prices and the gap with spot prices also boosting spot purchases,” said Kang Jin-hyuk, an analyst at Shinhan Securities in Seoul, adding that the KOSPI cut gains near the session close after the ETF effect.
Boosted by huge retail buying of leveraged ETFs, financial investment firms were net buyers of KOSPI shares worth 1.3 trillion won. Retail investors also bought 403 billion won, but foreign investors were net sellers.
The Korea Financial Investment Association’s website, which provides online courses required for retail investors to invest in leveraged ETFs, was briefly offline on Wednesday as investors rushed to access the courses, local media reported.
Of the total 918 regular shares traded on the benchmark index, only 75 shares advanced, while 826 declined.
($1 = 1,507.8300 won)
(Reporting by Jihoon Lee, Yena Park and Heekyong Yang; Editing by Ed Davies, Jamie Freed and Kate Mayberry)
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