Big Tech Capex Surge Confirms Memory-Power Supercycle, Samsung Foundry Also Recovering

In early trading the KOSPI fell about 0.2%, moving between 6,660 and 6,670, while the KOSDAQ dropped more sharply, falling over 1% and barely holding the 1,200 level. The won opened weaker at 1,486 per dollar.

The decline followed a report from US outlet Axios that US Central Command is planning a short, powerful strike on Iranian infrastructure. The report pushed WTI crude past $108 a barrel and erased gains in US futures. Japan's Nikkei fell about 1.2% and Hong Kong's Hang Seng widened its loss to as much as 1.2%.

The prior night, US semiconductor and AI-related stocks actually posted record after-hours gains. Memory maker Seagate jumped 18% after-hours on strong earnings, while legacy/power semiconductor maker NXP Semiconductors surged 16% after its results. A reflective mood took hold in the US market that earlier worries about the broader AI ecosystem had been overdone.

Samsung Electronics released its finalized quarterly results, with total operating profit essentially unchanged from the preliminary figure at roughly 57.2 trillion won. By segment, the Device Solutions (semiconductor) division accounted for the overwhelming majority of profit at 53.7 trillion won, with an operating margin of 66%.

On the earnings call, Samsung said it is already taking orders for next year's memory supply, with the supply-demand fulfillment ratio at a record low. Q1 DRAM shipments rose about 10% and NAND about 20%, while prices rose roughly 90%. The company said it has signed binding multi-year contracts with some customers. On HBM, it plans to supply first samples of its most advanced HBM4E in the second quarter.

The foundry business is running at maximum utilization, having improved from a segment long troubled by lower yields and order wins versus TSMC. Samsung noted second-half foundry results could still see some deterioration, and said it would maintain production despite ongoing labor strikes.

These official remarks at the finalized-earnings presentation eased much of the market's lingering concern over the memory cycle. Samsung shares still fell about 0.6% intraday amid broader market weakness, trading around 224,500 won.

HYBE reported an operating loss of 196.6 billion won, initially rattling the market, but the loss was traced to a one-time accounting charge tied to employee stock grants. Excluding that, adjusted operating profit rose 170% year-over-year to 58.5 billion won, beating the market consensus of 51.1 billion won.

Underlying business performance, boosted by BTS's comeback, appeared solid. However, rising renewal costs for artist contracts going forward were flagged as a risk inherent to the volatile profitability of entertainment stocks. In the near term, entertainment stocks could also get a boost from foreign tourist inflows during Japan and China's Labor Day holidays.

Four US Big Tech companies reported earnings. Google was the standout, posting strong results across operating income, cloud, and Gemini while also raising investment, sending shares up more than 7% after-hours. Amazon also delivered solid results, citing strong sales of its in-house Trainium AI chip, and rose about 2.7%.

Meta drew concern as its investment growth outpaced earnings growth, compounded by ongoing losses in units like Reality Labs, and fell about 7% after-hours. Microsoft's results themselves were solid, but lingering doubts about its relationship with OpenAI left shares roughly flat, down 0.3%.

The key metric was each company's capital expenditure growth. For Q1 2026, Google guided to spending up 100% year-over-year, Amazon 77%, Microsoft 89%, and Meta 47%. Full-year capex is estimated at about $190 billion each for Google and Microsoft and about $145 billion for Meta. Amazon indicated on its earnings call that it expects substantial investment throughout 2026, with capex growth potentially outpacing revenue growth in the near term.

Goldman Sachs noted that current earnings strength is colliding with long-term growth expectations for Big Tech. With uncertainty over which company ultimately wins the AI race, the argument was made that companies supplying the hardware needed for that competition stand to benefit regardless of the outcome — much like how, during the US railroad and mining booms, it was the maker of blue jeans that profited most. This framed semiconductor and power infrastructure suppliers as the likely winners.

The Federal Reserve's April FOMC meeting held rates at 3.75% for a third consecutive time. The hold itself was expected, but four dissents marked the most since 1992. Trump appointee Stephen Miran dissented in favor of a 25bp cut, while three other members dissented in the opposite direction, opposing language suggesting an easing bias, signaling hawkish resolve.

Chair Powell indicated he intends to remain on the Board even after his chairmanship ends, breaking with the customary practice of resigning entirely when a chair's term concludes. He said he would stay until legal risks raised by President Trump, including threats of criminal prosecution, are fully resolved. Trump renewed his social media criticism, calling Powell 'Mr. Too Late' for consistently cutting rates too slowly.

With three of the four dissenters revealing hawkish leanings, markets interpreted this as a sign of a more hawkish Fed going forward, pushing Treasury yields higher. Higher yields reduce the relative appeal of equities, weighing on the broader market.

Rebuilding Korea Party lawmaker Lee Hae-min said that at a presidential luncheon with non-negotiating-bloc lawmakers the previous day, she urged the president to advance legislation for Korea to become a top-three AI power and to establish cloud security governance. She noted that while becoming a top-three AI power is an ambitious national agenda, it first requires clear metrics across three areas: public satisfaction, global corporate value, and administrative efficiency and safety.

On AI data center legislation, she said she has sponsored a bill enabling power purchase agreements (PPAs) that let data centers contract directly with power plants, bypassing the state utility KEPCO's transmission grid. The bill has passed the Science, ICT, Broadcasting and Communications Committee but remains pending in the Legislation and Judiciary Committee. She explained that companies seeking AI data centers prioritize stable power supply, low cost, and large-scale capacity in that order — and that cost has actually become a lower priority.

On security, she cited concerns that Anthropic's newest model can reportedly bypass most existing defenses, prompting security meetings among US financial institutions and government agencies with access. Currently 52 companies have been granted access, all US-based, with the UK the only non-US country included — leaving Korea excluded, a gap she flagged as a concern. She stressed the need to diversify partnerships across multiple AI providers rather than relying on a single vendor, and called for domestic cloud security policy to be built quickly from the user's perspective.

Referencing the conflict between Samsung Electronics' union and shareholders, Lee said the US-style RSU (restricted stock unit) system aligns the interests of employees and shareholders and helps retain talent, contributing to sustainable corporate growth. She described the AI value chain as consisting of five layers — data/users, networks, computing (chips), data centers, and power — noting Korea's strength lies in memory semiconductors and neural processing units (NPUs).