Semiconductor industry faces volatility amid peak cycle debates

The semiconductor industry is experiencing significant volatility as debates intensify regarding the peak of the memory chip cycle. In South Korea, market participants are divided; some fear a slowdown in profit growth for giants like Samsung Electronics and SK hynix due to decelerating price increases and potential reduced investment from U.S. big tech firms. Conversely, others remain bullish, citing continued supply shortages through next year and expectations for large-scale shareholder returns.

Amidst this uncertainty, some analysts have raised KOSPI targets significantly, with Samsung Securities projecting a potential high of 12,600 points driven by strong semiconductor performance, despite risks from high exchange rates and interest rate uncertainty.

In Japan, the sector faces its own set of challenges. While AI semiconductor demand remains a strong driver, companies like Kioxia Holdings have seen significant stock price fluctuations. Analysts have identified five key risks facing the industry as it transitions from the generative AI era to the AI agent era.