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Samsung, SK hynix stocks to rally on chip market recovery: analysts

Shares of Samsung Electronics and SK hynix -- South Korea’s largest chipmakers -- which hit record highs last week should gain momentum this year on the back of the global semiconductor market’s recovery, according to analysts.

Samsung shares closed at 59,500 won ($51.20) Friday, outperforming the previous all-time high of 58,600 won the previous day.

Meanwhile, its crosstown rival SK hynix shed 0.1 percent from the previous trading to close at 98,900 won, failing to extend its rally after also setting a record Thursday with 99,000 won. 

A Yonhap Infomax employee points to a screen showing Samsung Electronics’ share price, Friday. (Yonhap)
A Yonhap Infomax employee points to a screen showing Samsung Electronics’ share price, Friday. (Yonhap)

Foreigners net purchased 97.7 billion worth of Samsung shares and 5.8 billion won worth of SK hynix shares.

Despite SK hynix’s slip on Friday, analysts’ long-term outlook for both companies is rosy, with some saying the duo will eventually account for a combined 30 percent of Kospi market capitalization. Their combined market cap at the moment accounts for more than 29 percent of the total.

“There has been a noticeable rise in NAND and DRAM memory chip prices and semiconductor exports are likely to see a gradual U-shaped recovery,” said Lee Seung-woo, an analyst at Eugene Investment and Securities.

In line with the recovery of the memory cycle, the local chip manufacturers can expect to see a spike in both their sales and operating profit, Lee added.

Samsung is optimistic about the chip industry’s prospects, yet cautious at the same time. Kim Ki-nam, vice chairman of the tech giant’s semiconductor business unit, told The Korea Herald at Consumer Electronics Show 2020 in Las Vegas the market was showing signs of recovery, but it is difficult to predict how much it would recover or which factors would play a role.

Earlier this week, Samsung said it had posted 59 trillion won in sales and operating profit of 7.1 trillion won in the fourth quarter of 2019. SK hynix has yet to post its fourth-quarter earnings, but analysts project an operating profit in excess of 440 billion won.

By Jung Min-kyung (