What’s happening with South Korea’s technology companies? Profits up and share price diving. Is a bubble bursting:
South Korean technology giant Samsung Electronics says it expects to post a 19-fold jump in its profits, driven by global demand for artificial intelligence (AI) memory chips.
Investor jitters over how long the artificial intelligence spending boom will last and concern over Chinese competition in chipmaking sent technology shares plunging Tuesday.
South Korea’s Samsung Electronics fell more than 12 percent and Japanese memory chipmaker Kioxia was down 18 percent, while Taiwanese giant TSMC slid 3.0 percent.
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Slowing potential for future growth. Demand might fall when or if AI reaches its building goals. Typical worry warts stuff. Day traders need rumors to trade on.
If AI succeeds as much as we hope I suspect buildout will continue. But no guarantees. The amount of digital data to process continues to increase. It has to go somewhere. No one suggests we delete it.
Memory chips are notoriously cyclical. Some worry when the current trend will end.
It’s just part of a general slump:
South Korea’s benchmark KOSPI has plunged more than 33% in July, its worst month in history. The collapse surpasses the October 1997 IMF crisis, when the index lost 27%, and the October 2008 global financial crisis at 23%.
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Terrible. I hope it’s not a portent for us since if the U.S. indices dropped 33% in a month, we’d be way back to March of last year…
Pete
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Korean mutual fund is heavily influenced by Samsung and SK Hynix. Both very into producing memory chips. AI demand has been strong. But investors worry demand may be near its peak reducing growth potential. The rest of Korea seems to be ok. Autos, steel. Slowing economy might have an impact.
They tell us the S&P in the U.S. is heavy in tech stocks. AI concerns can have a major impact. The economy is slowing but tech companies drive a positive GDP.
Personally I think the worry warts are wrong. AI will improve productivity and continue to grow for decades. That makes the dips a buying opportunity. But no one knows. It’s a risk.
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