SK Hynix, Samsung Shares Extend Gain on Report Temasek to Invest

South Korean chipmakers Samsung Electronics and SK Hynix experienced a rally after a report suggested Singapore’s Temasek planned to invest in the two companies. Shares of the firms surged more than 8% on August 12 following an Asia Business Daily report. By the end of the day, Samsung had gained 6.7%, while SK Hynix rose 5.5%. The benchmark Kospi index also climbed 3.7%.

Temasek denied seeking advice from the South Korean government on the investment timing and stated that they had previously invested in both firms over two years ago. The chipmakers had suffered a significant sell-off in July due to concerns over the rapid development of artificial intelligence infrastructure, causing leveraged positions to unwind.

Analysts noted that while the local report signaled positive confidence, it was unlikely to be the main driver behind the Kospi rebound. SK Hynix had announced plans to share shareholder return details in the third quarter, and Samsung was expected to follow suit, with KB Securities analysts predicting a more than tenfold increase in shareholder returns.

The memory chipmakers' valuations had plummeted to record lows following the July market rout. Samsung and SK Hynix were trading at 4.2 and 3.6 times forward earnings, respectively, compared to over 21 times for the global semiconductor index, the Philadelphia Semiconductor Index. Global funds poured nearly US$2 billion into Kospi shares on August 12, while retail traders sold.

Should the investment be confirmed, it would represent strong foreign confidence in Korea's AI/memory cycle and serve as a key driver supporting the Kospi rebound, according to Ha SeokKeun, chief investment officer at Eugene Asset Management.