A wave of investment is sweeping across Wall Street toward Samsung Electronics (005930.KS) and SK hynix (000660.KS), as the two companies post world-leading earnings amid a memory chip supply crunch and an artificial intelligence (AI) boom. Trillions of won in individual investor money have flowed into an exchange-traded fund (ETF) concentrated in the two stocks, while assessments continue that their share prices remain cheap relative to earnings. With the memory chip super cycle expected to last at least two more years, a substantial portion of global investment capital is likely to continue flowing into Samsung Electronics and SK hynix for the time being.
Samsung Electronics, SK hynix Post Blockbuster Q1 Results... U.S. ETF Draws 1.5 Trillion Won in Two Weeks
According to The Wall Street Journal (WSJ) on Tuesday, the Roundhill Memory ETF, a memory-sector theme fund listed on the New York Stock Exchange on the 2nd, increased its assets under management (AUM) to more than $1 billion (about 1.5 trillion won) in just 10 trading days through the 17th. The ETF further grew its AUM by about 300 billion won through the 21st, swelling to $1.22 billion (about 1.8 trillion won). Considering that the ETF's AUM stood at only $250,000 (about 370 million won) at the time of listing, it represents a record performance.
The Roundhill Memory ETF is managed by Roundhill, a small U.S. asset management firm. As of the 21st, it invests 26.9% in SK hynix and 23.4% in Samsung Electronics, with the two stocks alone accounting for 50.3% of the fund. It is effectively little different from semiconductor ETFs centered on Samsung Electronics and SK hynix that trade in Korea. Roundhill was founded in 2018 and currently has only 12 employees.
The WSJ said, "The Roundhill Memory ETF received little attention at the time of its listing and launched without major early seed investors," adding that "nonetheless, it gathered more than $1 billion in assets in less than two weeks, an unprecedented achievement for a small asset management firm." Dave Mazza, Roundhill's chief executive officer (CEO), was also surprised, saying, "Honestly, I didn't expect this ETF to rise to such an untouchable level within ten days."
The strong interest from Wall Street investors in the Roundhill Memory ETF from its early days is attributed to the fact that the two companies are posting world-leading earnings on the back of the memory chip supply crunch and growth in the high-bandwidth memory (HBM) market. On the 7th, Samsung Electronics announced that it posted revenue of 133 trillion won and operating profit of 57.2 trillion won in the first quarter, up 68% and 755% respectively from the same period last year. In particular, the first-quarter operating profit surpassed last year's full-year result of 43.6 trillion won in just a single quarter. This was higher than the profit forecast for Google, a leading U.S. technology giant.
On Wednesday, SK hynix also disclosed that it posted first-quarter revenue of 52.5763 trillion won and operating profit of 37.6103 trillion won, up 405.5% and 198.1% respectively from the same period last year. These were record quarterly results, with operating profit more than doubling from 19.1696 trillion won in the fourth quarter of last year. In particular, the operating margin reached 72%, an unprecedented level among manufacturers worldwide. Buoyed by the strong results, cash and cash equivalents also grew to 54.3 trillion won, an increase of 19.4 trillion won from the end of last year. SK hynix explained, "Despite the first quarter being a seasonally weak period, demand strength continued due to expanded investment in AI infrastructure," adding that "increased sales of high-value-added products such as HBM, high-capacity server DRAM modules, and enterprise solid-state drives (eSSD) led to the earnings growth."
AI-Driven Earnings March Pushes Forward P/E Below 10x... 20 Trillion Won ADR Listing in Second Half Also Draws Interest
Wall Street analyzed that even as the two companies' share prices rose steeply, U.S. individuals had no proper way to buy the stocks, and the Roundhill Memory ETF opened the door to investment. Eric Balchunas, an analyst at Bloomberg Intelligence, wrote on X (formerly Twitter) on the 21st that it was "beyond shocking," calling it "insane volume for a new fund and the most undervalued AI play."
Assessments that the share prices remain cheap relative to earnings emerged in many quarters. Bloomberg praised on the 22nd that "memory chip company stocks are currently among the hottest yet still the cheapest stocks in the market." Bloomberg explained that "amid surging demand for HBM used in AI servers, Samsung Electronics' share price has tripled and SK hynix's has quadrupled since the end of August last year," while adding that "competitors such as Micron are also posting record revenue and profit, yet their price-to-earnings ratio (PER) based on 12-month forward earnings remains below 10x."
Bloomberg cited the semiconductor industry's distinctive business cycle as the reason Samsung Electronics and SK hynix shares remain undervalued. The analysis was that many investors hesitate to make additional investments, anticipating that periodic oversupply will come. Bloomberg diagnosed, "Optimists argue that 'this time is different because AI is driving unprecedented demand in a super cycle,' but pessimists counter that 'the cycle hasn't disappeared, it's just dormant.'"
SK hynix's plan to list on the New York Stock Exchange in the second half of this year is also a point of interest on Wall Street. SK hynix has already submitted an application for a U.S. American Depositary Receipt (ADR) listing to the U.S. Securities and Exchange Commission (SEC). Reuters, citing sources on the 25th of last month, reported that SK hynix intends to list about 2 to 3% of its total shares on the U.S. market and expects to raise between $9.6 billion and $14.4 billion (about 14 trillion to 21 trillion won) through this. The funds are to be invested in the Yongin cluster in Gyeonggi Province and a semiconductor manufacturing plant in Indiana, U.S.
The market expects SK hynix to list ADRs by issuing new shares rather than existing treasury stock. In that case, the value of existing shareholders' stakes could be diluted, so SK hynix is reportedly considering pursuing share buybacks and cancellations in parallel. Kwak Noh-jung, CEO of SK hynix, presented a goal of securing more than 100 trillion won in net cash at last month's shareholders' meeting on the 25th, saying, "To respond to structural demand growth and maintain competitiveness, financial soundness that allows for stable investment is essential."
'Currently Irreplaceable' Memory at the Bottom of the AI Ecosystem to Enjoy Boom for Now... Samsung Union Strike Issue Also in Focus
The reason memory chip makers, which sit at virtually the bottom of the AI ecosystem, are thriving like this is that the entry barriers in this field are especially high, unlike other industries. Given the industry's characteristics requiring large-scale capital investment and accumulated technology, there are almost no companies other than Samsung Electronics, SK hynix, and Micron with the capability to supply high-spec chips such as HBM. The capabilities of Intel, which dreams of rebuilding U.S. semiconductors, and Chinese firms still fall far short of the top three companies.
This is a structure quite different from the AI model market, where Google, OpenAI, Meta, Anthropic, and xAI compete, and the AI platform and cloud market, where Google, Microsoft (MS), Apple, Oracle, and Amazon battle it out. In the AI-related chip design field, the customer base for memory chip companies, Nvidia, Broadcom, and AMD are major players, while in the non-memory semiconductor field of foundry (contract chip manufacturing), TSMC and Samsung Electronics are currently listed as the main players.
Accordingly, major foreign media outlets agreed that the boom for Samsung Electronics and SK hynix will continue for some time. Indeed, foreign investors have driven up share prices in the domestic stock market this month through the 23rd, net buying 1.781 trillion won of Samsung Electronics and 1.6098 trillion won of SK hynix. Considering that foreign investors net bought 4.6981 trillion won across the entire KOSPI market during this period, they concentrated 72.2% of their funds on the two stocks alone. As of the 23rd, Samsung Electronics' share price was 224,500 won and SK hynix's was 1,225,000 won.
CNBC, reporting SK hynix's record first-quarter results on the 22nd, assessed that "SK hynix has gained an edge over rivals such as Samsung Electronics and Micron by becoming a key supplier with leading leadership in the HBM market." CNBC said, "Samsung Electronics regained the top spot in DRAM revenue in the fourth quarter of last year, but the HBM market is still dominated by SK hynix with a 57% share," and introduced remarks by SK Group Chairman Tae-won Choi last month that global semiconductor wafer shortages are likely to persist through 2030 as HBM demand exceeds supply and strains manufacturing capacity. At the time, Chairman Choi predicted it would take at least 4 to 5 years to expand wafer supply, and that the shortfall would exceed 20% during that period. CNBC also cited data from market research firm Counterpoint Research, saying that "the DRAM market recorded growth in the 30% range for two consecutive quarters on the back of rising memory chip prices," and analyzed that "the rise in memory prices was driven by the effect of limited manufacturing capacity amid surging HBM demand."
Samsung Electronics' labor union issue is also a part Wall Street is watching. AP reported in detail on the 23rd on the situation at Samsung Electronics' Pyeongtaek site in Gyeonggi Province, where thousands to tens of thousands of Samsung Electronics employees are demanding the company provide compensation commensurate with its performance. Samsung Electronics' union currently holds the position that it will launch an 18-day general strike from the 21st of next month to June 7 if negotiations with management break down. The union estimates that if the general strike materializes, Samsung Electronics' daily losses will reach 1 trillion won.
As Wall Street's interest in investing in Samsung Electronics and SK hynix grows, the likelihood that share prices will gain momentum for the time being appears to have increased. However, the key going forward is when skepticism that the boom cycle could turn at any time begins to spread.
※ 'Trump Stocker' is a column that delivers on-the-ground stories and analysis of current issues related to U.S. markets, companies, policy, politics, and diplomacy that may be helpful for investing in the era of President Donald Trump. Subscribe to receive useful news from the United States.
The Era of 20 Trillion Won in Incentives! SK hynix, Raking in Money, and the Last Entry Window Left for Retail Investors
