Peak-Semiconductor Fears vs. the Scale Theory: Rep. Lee Hae-min's Case for Korea's AI Megaproject Amid a Wobbling KOSPI

On July 8 the KOSPI fell as much as 1.8% early in the session to touch 7,518 points, while the KOSDAQ dropped further, sliding 3.8% to 799 points. Foreign investors sold in both the cash and options markets, while institutions bought a net roughly 1 trillion won, with pension funds extending purchases for a second straight day. Losses narrowed later in the day, with the KOSPI recovering to a 0.7% decline above the 7,600 level and the KOSDAQ's drop easing to around 3%. Among large-cap names, SK hynix gained about 3.6% while Samsung Electronics fell about 2%, holding the 290,000-won line.

The hosts advised against aggressive buying or selling — and especially leveraged bets — during periods of high volatility. They recommended setting a personal loss tolerance in advance and trimming 30-40% of a position if it falls more than 10% relative to the broader market. This was framed not as pessimism but as a way to build cash for the next opportunity.

The Dow Jones Industrial Average fell 0.25%, the Nasdaq Composite dropped 1.16%, the S&P 500 slid 0.45%, and the Russell 2000 declined 0.9%, with all three major indexes closing in negative territory. The market briefly attempted to stabilize near session lows before oil's spike on Strait of Hormuz tensions erased the gains.

Semiconductor stocks were at the center of the decline. Fallout from South Korean chip stocks' sharp drop after Samsung Electronics' preliminary earnings the previous day spilled into US markets, pushing Micron Technology, SanDisk and other memory names lower from the open.

Nvidia, however, turned positive despite the negative headline of DeepSeek reportedly developing its own AI chip. Palantir also climbed as much as 4% intraday before trimming gains, as software and big-tech names showed relatively resilient trading.

The 10-year Treasury yield rose 1.6% and the dollar index climbed toward the 100 level, reflecting caution ahead of the next day's FOMC minutes release as well as inflation concerns tied to the oil price surge.

Samsung Electronics reported roughly 57 trillion won in operating profit for Q1, followed by about 89 trillion won in Q2. In the quarterly operating-profit chart going back to 2015, these two quarters stand out sharply, splitting opinion over whether this is a temporary spike or the start of a new earnings regime.

Kiwoom Securities became the first domestic brokerage to cut its Samsung target price, from 430,000 won to 390,000 won, citing slowing EPS growth in the second half alongside rising expectations for HBM4 market-share gains and intensifying competition from Chinese memory makers. Hyundai Motor Securities, by contrast, kept its target at 440,000 won, with a report titled, memorably, 'Its only sin is earning too much and rising too much.'

Morgan Stanley argued that the narrow, semiconductor-led rally is winding down and recommended trimming memory names like SK hynix in favor of hyperscalers. The hosts called out a circular-logic flaw in the report: it assumes the AI ecosystem isn't over while telling investors to rotate out of chips into hyperscalers — companies whose fortunes ultimately still depend on chip demand. They also questioned the bank's credibility given its prior 'Winter Is Coming' memory-downturn call, which it walked back with an apology months later, and the fact that SK hynix reportedly excluded Morgan Stanley from the underwriting syndicate for its planned U.S. listing.

Amazon disclosed plans to issue at least $25 billion in dollar-denominated bonds across eight tranches. With maturities stretching to 40 years, the proceeds are expected to fund mostly AI infrastructure investment, seen as a signal that hyperscaler AI spending has not slowed.

Meta unveiled Muse, an image-generation model developed by Alexander Wang's Superintelligence Labs. Slated for integration into Instagram, WhatsApp and other social apps, the launch eased market concern that Meta was scaling back AI investment.

Microsoft said it has begun using its in-house MAI model in some Excel and Outlook features, a move seen as pushing back on criticism that the company lacked its own AI model.

SpaceX, newly added to the Nasdaq 100, fell 6% to around $149 despite inclusion optimism. Wall Street price targets diverged sharply: Raymond James set $800, Morgan Stanley $300, and Deutsche Bank $255.

Tesla drew more bullish calls on merger momentum and expanding robotaxi and Cybercab businesses, with attention also turning to its humanoid robot unveiling expected in August or September. Tiger Brokers upgraded Coinbase to buy with a $200 target, and Visa reported stablecoin transaction volumes hit a record high in June.

Amazon is reportedly preparing to issue at least $25 billion in dollar-denominated bonds, with most proceeds expected to fund AI infrastructure. Deutsche Bank data cited on the show shows hyperscaler capex increasingly outstripping operating cash flow, prompting market doubts about how long the spending can continue.

The hosts pushed back, arguing capex should be viewed as investment, not expense. Borrowing to keep investing when cash runs short is a rational choice to avoid falling behind in the AI infrastructure race — and the moment a company stops investing, everything spent before instantly becomes sunk cost, and it drops out of the race. They suggested the eventual winner may be decided between companies like Apple, which is holding back and watching, and companies like Amazon, willing to take on debt to keep expanding.

An internal U.S. Treasury report reportedly flagged AI bubble warning signs, noting that financial markets are now far more entangled with the real economy around AI than they were during the dot-com era. That, the hosts said, is precisely why Washington can't afford to let AI investment stall — a systemic risk that explains continued government-linked moves such as the OpenAI investment and the Intel stake.

Morgan Stanley said the narrow semiconductor-led growth phase is ending and market leadership is broadening, recommending investors trim semiconductor exposure and add hyperscaler exposure in the near term. Foreign selling of Samsung Electronics and SK hynix continued after the report.

China's DeepSeek has reportedly been developing its own inference AI chip for about a year to reduce reliance on Nvidia and Huawei chips. Other Chinese firms, including Zhipu AI, are also said to be pursuing custom chips, adding further downward pressure on the sector.

Separately, China's government is reportedly discussing restricting overseas access to domestic AI models with major tech firms such as Alibaba and Zhipu. This follows the US Commerce Department's export controls on Anthropic's Claude models, underscoring a broader trend toward bloc-based fragmentation in the AI industry.

Within the US, however, the prevailing view was that Samsung's decline reflected profit-taking rather than weak results. Analysts noted that, excluding one-off charges, Samsung's operating profit topped market expectations, while forecasts pointed to TSMC and ASML earnings having greater sway over chip stock direction going forward.

ADP-tracked weekly job growth over the four weeks through early July came in at roughly 21,000, with the prior week's figure revised down to 24,000 from an initial 30,000. Job growth has trended lower in seven of the past eight weeks.

The New York Fed's one-year inflation expectations rose to 3.7%, with the three-year reading at 3.3%, while the five-year figure eased slightly. The increase was attributed to surging oil prices and rising concerns over electricity demand.

New York Fed President John Williams said he views the inflation outlook as somewhat positive, suggesting the current uptick in expectations may prove temporary. The EIA said crude production recovery continues to accelerate, supporting the view that the oil rally may not persist.

Credit concerns resurfaced after news that HSBC is exiting its private lending business. Amid this macro uncertainty, Jefferies flagged value names such as American Express, Home Depot, Lowe's and PepsiCo as picks for navigating summer volatility.

Reuters reported that Beijing is considering restricting overseas access to China's most advanced AI models, a move read as treating frontier AI as a strategic national asset. DeepSeek was also reported to be developing its own AI chips.

China's apparent pivot away from its earlier fully-open, free-access strategy toward monetization was read two ways: as a sign of pressure to fund massive upcoming investment, and as a display of confidence in its top-tier models. The hosts noted China will likely be forced into large-scale AI infrastructure investment of its own before long — effectively creating one more source of chip demand.

Iran reportedly attacked a vessel transiting the Strait of Hormuz, and a British naval vessel was also struck, bringing the total to three ships attacked. The US Joint Maritime Information Center raised the Hormuz threat level to severe, and Washington revoked Iran's authorization to sell crude oil.

West Texas Intermediate crude jumped roughly 5% to around $72 a barrel on the news. An Iranian foreign ministry spokesperson urged regional states and shipping firms to avoid actions that would violate memorandum terms agreed with the US, suggesting an effort to contain further escalation.

At the NATO summit, defense contracts worth billions of dollars were announced, supporting the recent rally in US defense stocks. However, remarks from President Trump suggesting Greenland should fall under US control revived some geopolitical unease.

Washington also announced a partial easing of sanctions on Russian missile systems, seen as reflecting some willingness to negotiate an end to the Ukraine war. In Japan, Kioxia plunged more than 10% and Murata also declined, as Asian chip-related stocks broadly weakened in tandem with the global semiconductor pullback.

The overnight U.S. and global market brief above is compiled from 삼프로TV 오전 방송 (https://www.youtube.com/watch?v=jNDQUssfMz4).

Rep. Lee Hae-min welcomed the government's decision to expand its megaproject beyond memory chips to also cover AI data centers and physical AI. She explained that when Nvidia's Jensen Huang visited Korea, he met not just memory makers but cloud, robotics, and gaming companies too — a sign of a strategy to keep generating new demand (cloud subscriptions, data centers, physical AI) ahead of any plateau in chip demand.

With Asia still lacking an AI data-center hub and roughly 1,000 trillion won in pending demand, she said stable power supply and rate terms are the key to Korea winning that business. She noted that special utility-rate and power purchase agreement (PPA) provisions were stripped from her own AI data-center special bill before it passed the assembly — yet the government later separately announced plans to introduce a dedicated utility rate, a contradiction she has formally demanded the ministry explain in writing.

She described PPAs as direct deals between power generators and consumers that bypass the transmission grid — necessary because waiting for new transmission lines to be built risks losing time-sensitive demand. On criticism that competition among localities for the project has become politicized, she countered that government's job is to build the national infrastructure that lets companies choose freely, with the final siting decision resting with the companies themselves.

Citing Taiwan's full-throttle government support for TSMC's new fab, she argued Korea needs a similar approach — while stressing the goal is to build an environment any company could enter, not favors for one firm. Noting that a large share of papers and booths at the ICML conference currently underway in Korea are Chinese, she warned that China's rapidly strengthening AI fundamentals are both a threat to Korea's megaproject and, potentially, a new source of chip demand.

Lee Kwang-soo likened the relationship between Samsung's earnings and its share price to walking a dog: earnings are the owner, the stock price the dog. In the short run the two can drift apart and pull back together, but ultimately the owner determines direction and the dog follows. On that basis, he argued the stock price must eventually converge with earnings — behaving like a voting machine in the short run, but like a scale in the long run, weighing the company by its actual performance.

He rebutted the argument that Samsung's stock should be marked down because second-half profit growth will slow, comparing it to telling a child who scored 100 on a test that next time they must score 120. Investing, he said, is about pursuing truth, not merely facts — and repeatedly posting around 100 trillion won in quarterly operating profit is already an outstanding score in its own right.

He also pushed back on the claim that the earnings were 'already priced in,' noting that at the start of the year nobody had predicted Samsung would post roughly 90 trillion won in Q2 operating profit — making such claims hindsight bias. While acknowledging that single-stock leveraged products can distort short-term supply and demand, he argued that over the long run the scale doesn't lie, and Korean chipmakers deserve a longer time horizon from investors.