You have provided an overview, and while semiconductors have experienced a significant decline in the short term, it seems that the core issue is the need to generate revenue through AI. However, there has been continuous investment, raising concerns about profitability, which has led to discussions about a potential bubble. From your perspective, how do you see the future of semiconductors? Price-wise, they have indeed dropped significantly, but there is merit in that. For example, when secondary batteries fell by 30%, they were considered a good price opportunity, leading to declines of 50% to 70%. Samsung Electronics and SK Hynix have also dropped about 30% from their peaks, and while SK Hynix has seen a slight recovery, it's challenging to definitively state that the current prices of Samsung Electronics and SK Hynix represent the bottom. Therefore, I would appreciate your insights on the outlook for semiconductors. First, I would like to briefly share my perspective on the current AI bubble.

First of all, big tech companies are investing enormous amounts of money in AI, right? In my view, this investment is less about generating profit and more about survival. To put it simply, there are sites where AI is implemented and sites where it isn't. Those that don't adopt AI will be left behind. Therefore, companies have no choice but to invest in AI to win in the competition. For example, in the case of Amazon, there are sites where AI is applied and others where it isn't. In sales, the sites that have AI are the ones that survive, so they continue to invest in order to stay afloat. However, this isn't a bubble. The investments made by big tech companies are not funded by loans; they are using the massive profits they have earned. Thus, because this is an investment for survival, rather than focusing on profits, it's a structure where they must keep fighting and investing. This is how I understand the situation, so investments in AI will continue to progress.

This statement that big tech isn't borrowing money and is heading towards a crisis is somewhat incorrect. They are continuously investing with the money they have earned. Therefore, I believe that AI will continue to progress. Let's compare this situation to when the IT revolution occurred in the past. If we look at NVIDIA's stock price since 2020, during the IT revolution, Cisco, a hardware company, was the leading stock. From 1995, we can see Cisco's stock price, and then NVIDIA's stock price from 2020. In March, it rose a bit more, but compared to the IT bubble, it has increased significantly, yet not as much as it could have. At that time, the stock prices were fluctuating wildly, and Cisco's peak was many times higher. I can't remember the exact figure, but it rose so much. So, if we consider that NVIDIA's rise is less than half of that, it suggests that the IT revolution might continue.

It is a structure that can only continue to rise. Looking at the figures displayed below, this represents the revenue of MBDA. When we examine the revenue, it is truly concerning; the growth rate is much larger than the increase in revenue itself. In this situation, as the Morgan Stanley report indicated, growth has slowed down. This means that while the growth rate has decreased, growth itself is ongoing. However, it is unreasonable to expect the growth rate to increase significantly under these circumstances. Therefore, it shows that there is indeed strong growth, and with a focus on growth, NVIDIA can continue to rise. However, if the growth rate is constrained, it could be relatively weak due to the significant increases we've seen. Thus, the recent Morgan Stanley report coincided with Micron's performance results.

It has been somewhat diluted, and from a broader perspective, semiconductors are still on the rise. While there has been significant growth, compared to the IT revolution, there is still plenty of room for further increases. Next, regarding the semiconductor DRAM cycle, even from a cyclical standpoint, there is still potential for more growth. However, this DRAM cycle was somewhat overlooked in the recent Morgan Stanley report. In the past, Morgan Stanley frequently used this graph, and whenever their report came out, it always indicated that DRAM experiences two years of decline followed by two years of growth. This DRAM pricing is based on year-over-year (YoY) comparisons. So, after two years of decline, there are two years of growth, and the report aligned well with this cycle. The most memorable reference we have is Winter is Coming, suggesting that a winter for semiconductors is approaching.

In August 2021, it was precisely when the cycle reached its peak. Therefore, I was submitting reports based on this cycle, but this time, it was adjusted according to the AI revolution. The growth rate of AI, as you saw earlier, is indeed difficult to slow down, as it is experiencing significant growth. So, this report might deviate from past trends in that regard. In fact, up until then, I had been quite accurate with the reports. In October 2022, a report indicated that the semiconductor winter was coming to an end. At that time, Samsung Electronics' stock price was at its low point, and SK Hynix experienced another rise about 7 to 8 months later. However, I feel that Samsung Electronics has also been on point. It seems that Morgan Stanley's report was accurate.

This time, they usually ignore certain benefits they frequently use and, according to the growth rate, perhaps there were some different intentions mixed in. If we look at Morgan Stanley, for instance, there are issues related to preemptive trading that are coming up. So, there are investigations being conducted, and it seems there might be different aspects to consider. In fact, regarding DRAM and legacy semiconductors, we should expect a rise until next year. If we observe the situation during the COVID crisis, there was an increase in server expansions and, due to remote work, tablet PCs have been produced in large quantities, which has led to a rise that has extended beyond two years. Therefore, the cycle of increase has been prolonged, and we have also seen a decline that lasted about two years and two months. The low point was in October 2023.

If there is another rise here, it will continue for more than two years, right? Then, it means that it will keep rising until October next year. So, looking at the DRAM semiconductor sector, it seems that it can rise differently from the reports. Next, we can see that Chinese semiconductor manufacturers are also making advances, which may weaken semiconductor prices. There are various discussions about this. Now, let's take a look at the semiconductor market share for the second quarter. This is the DRAM market share for the second quarter. Compared to the first quarter, Samsung Electronics slightly decreased from 43.9% to 42.9%, while SK Hynix surged from 31.1% to 34.5%. Micron, on the other hand, actually saw a decrease. Yes, Micron's market share has decreased despite having strong performance. Now, looking at Micron's fourth-quarter results, the revenue compared to the same period last year...

There has been an astonishing increase of 93%, and the outlook remains positive for the future. The forecasts continue to be favorable, which is completely different from Morgan Stanley's projections. Morgan Stanley's outlook is weak, which is why Micron has seen such a decline. Of course, the HBM effect plays a significant role here, and if investments in AI continue, SK Hynix will benefit the most, rather than Micron. The data shows this clearly. Therefore, there is a possibility of a stronger rebound compared to Samsung Electronics. This is the HBM effect at work. Additionally, even if we consider that Chinese companies are making advances, their market share has actually decreased from 1.6% to 1.3%, and then to 0.7% and 0.1%. Therefore, it is not a situation to be worried about, as the concerns presented in the report seem to be somewhat exaggerated. When we look at the third quarter, we need to consider how much growth can actually be expected, as the three companies already dominate the market.

According to the second report, the fluctuations in stock prices can be seen as a sign that our market is somewhat weak. This is because the supply and demand are not supporting it; when a different report comes out, the prices drop sharply, and when a positive report is released, they surge, leading to increased volatility. After such adjustments, these fluctuations often transition into upward movements. From the data perspective, if we look at SK Hynix, compared to Samsung Electronics, before the introduction of HBM, Micron had about a 20% market share, while Samsung Electronics had around 40%. However, it is truly comical how they are chasing after Samsung in terms of revenue. When we look at revenue growth, it is noticeably significant; Samsung Electronics increased by about 22%, nearing 40%, while Micron saw an increase of about 14%.

Based on the data, it is an environment where SK Hynix cannot help but be favorable. As I mentioned earlier, the legacy semiconductor market is continuously improving next year. If you look at it now, Morgan Stanley has lowered SK Hynix's target price significantly to 260,000 won, which seems unreasonable at 120,000 won. The data shows that it has been downgraded even more than Micron, whereas the data for SK Hynix looks much better than that of Micron. Therefore, unless there are some other factors at play, the target seems questionable. From the data perspective, this seems excessive, which indicates that such adjustments could be buying opportunities. On the other hand, if we look at Samsung Electronics, one weak aspect is its foundry market share. The foundry market share should be increasing, but it is stuck around 11% to 11.5%, remaining stagnant.

The gap with TSMC is becoming very, very large; it's over 50%. However, if you look here, the Chinese companies have risen quite significantly compared to last year. Given this aspect, there have been cases where Samsung Electronics' stock price has moved based on expectations for the foundry, but right now, it's still weak, so the foundry market share is not noticeable. This aspect is impacting the stock price. 

However, recently, the CEO has indicated a different conclusion regarding TSMC, suggesting that they might consider outsourcing to other companies as well. When such indications arise, it acts as a positive factor because, in reality, Samsung Electronics is the only option. Therefore, there is a chance that this will work favorably in price negotiations. Currently, TSMC is, in a way, dominating the situation.

Since they have a monopoly in the form of a structure, there are some aspects to consider. If Samsung Electronics can show visible results in the foundry sector quickly, we might see a rebound, but so far, there hasn't been anything like that. I can explain this with data. Next, let's take a look at the performance aspect. The second-quarter results were exceptionally good. For Samsung Electronics, last year it was around 600 billion, and now it has exceeded 10 trillion, showing a significant increase. On the other hand, SK Hynix had a second-quarter loss of 2.8 trillion last year, but this year it has turned into a profit of 5.4 trillion, marking a dramatic improvement. So, based on these results, as of September 26, I calculated the price-to-earnings ratio (PER) assuming that the net profit for the second quarter continues. Of course, the net profit will increase as semiconductor prices continue to rise.

If the second quarter results continued without any increase, looking at the annual price-to-earnings ratio, Samsung Electronics is at 9.81 times and SK Hynix at 7.99 times. Although they have risen significantly, in terms of value, SK Hynix still has a bit more merit. Therefore, if we combine the two, the average is around 9 times. Currently, the KOSPI index is at 18 times, which means the price merit is only half compared to that. So, in reality, there is sufficient price merit. In the case of secondary batteries, there has been a correction, and the industry has also faced adjustments, but semiconductors have adjusted differently, and the industry outlook can continue to improve. This is a significant difference, so there is a reason to take an interest now, especially since positive news has emerged. The good news is not just any news; it’s related to value, which I hadn’t considered at all, but Samsung Electronics and SK Hynix have been included. This can be seen as an existing value-up benefit that they have received.

Samsung Electronics and SK Hynix are not expected to be included in the value-up. It was obvious to everyone, but now that they are included, there is a possibility of an increase, which could lead to a more favorable supply situation. Consequently, related to value, there may also be market-friendly disclosures, which can raise expectations. Therefore, this aspect can also act as a positive factor.

Now, let's take a look at the daily chart. This is the daily chart for SK Hynix. If we look at the daily chart, the average foreign investor price from January to August this year is around 185,000 won. The price had been declining towards this 185,000 won mark, but today it has actually risen close to 185,000 won. This reflects the price range where foreign investors have entered. Additionally, with the semiconductor market improving and impacting the value, from this perspective,

This is a sufficiently purchasable area, and I see it this way. However, Samsung Electronics needs a bit more time. Looking at it now, there has been a significant decline, and the rebound itself is somewhat weak. Foreign investors have sold off heavily, so while a rebound can occur following the decline, for it to break through, there is a considerable amount of foreign selling pressure, and they have bought in large quantities, which means a bit more time is needed. As we saw earlier, when compared to SK Hynix, it has dropped significantly, but in terms of value, SK Hynix has a bit more price merit. Additionally, looking at industry growth, based on previous data, SK Hynix appears to be growing more than Samsung Electronics. Therefore, in the semiconductor sector, it might be better to focus more on SK Hynix. Next, if we look back at the past, this is the monthly chart of SK Hynix.

The monthly chart shows the DM YoY DRAM prices superimposed with the semiconductor cycle. When we look at it this way, we can see that during the peak of the cycle, there was an additional year of increase in 2010, another increase in 2013 compared to the cycle peak, and again in 2017 there was a further increase. Then in 2021, we experienced a rise due to COVID-19, but it has since tapered off, which presents a slightly different aspect. When we observe the previous increases, we note that the semiconductor cycle peaked, yet there was an additional year of growth. If we consider the DM semiconductor cycle extending to two years plus an additional year, we can expect that the DM prices will continue to rise until next year. If we look at it from a two-year perspective, an additional year of past increases could suggest that SK Hynix may experience growth for more than two years. Therefore, I believe that the current adjustment presents a buying opportunity.

So, I would suggest that you take an interest in large-cap stocks like SK Hynix in the semiconductor sector at the current price levels. There is a possibility that prices may drop further; predicting stock prices is indeed difficult. However, in my judgment, I don't think they will fall below the previous lows. Additionally, Micron's performance has been reflected in their numbers, and the Morgan Stanley report has been somewhat diluted. Therefore, it is unlikely that a more significant negative factor will emerge. Given the current price adjustment, I recommend approaching it as a buying opportunity. Furthermore, from a performance perspective, the third and fourth quarters are expected to continue improving, so it should get better through next year. The semiconductor industry is still a growth sector; considering the demand for semiconductors, it is growing not only for traditional PCs but also for electric vehicles, robotics, and HBM, as various demands continue to increase.

When the semiconductor cycle arrives and reaches its peak, we can see that stock prices have always broken through to new highs. This is because it is a growth industry. Therefore, if the semiconductor cycle peaks again next year and continues to rise, I believe that it can surpass past stock prices and continue to show significant growth. As for the current DRAM prices, it is still difficult to say that they have reached their peak. So, there is a possibility that Hynix could break through its recent previous highs. Yes, I believe that is possible.

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"목표 주가 12만원?" 바닥에 처박힌 삼성전자와 '이 주식' 눈 감고 '이때' 부터 주워 담아라. 돈복 대박 터진다 (이희근 대표 / 2부)

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