Semiconductors Slammed by a Triple Blow as K-Beauty Exports Surge

On July 16, the KOSPI gave back the previous session's gains in a single day, falling more than 6% to around 6,835 points. The KOSDAQ dropped roughly 4% to the 795-point level, and a sell-side circuit breaker kicked in early in the session amid heightened volatility. The won-dollar rate steadied somewhat to the 1,480 range, partly reflecting the Bank of Korea's rate-hike decision.

Three main factors were cited for the day's slide: news of Chinese memory maker CXMT's IPO, a cautionary Morgan Stanley report on AI data centers, and a mixed set of headlines around ASML's strong results and CoreWeave's reported hedging plans against falling chip prices. The market appeared to weight the negative headlines more heavily.

The hosts noted, however, that none of the day's news fundamentally undermined the semiconductor industry's growth trajectory. They argued more weight should go to already-confirmed figures — like ASML's results and raised guidance — over speculative signals.

Samsung Electronics fell about 8% and SK Hynix around 10% on the day. The first trigger was China's CXMT listing: the funds it plans to raise ballooned from an initially expected roughly 6 trillion won to 12–14 trillion won, prompting interpretations that foreign investors were taking profits on Samsung Electronics and SK Hynix to rotate into the relatively cheaper CXMT. The hosts pushed back, noting CXMT's global market share remains around 7% and its listing documents exclude HBM and other advanced technology, so a larger fundraising figure alone doesn't justify treating it as a threat to the top three memory makers.

The second trigger was a Morgan Stanley report describing intensifying local opposition to AI data-center construction, citing $150 billion in projects canceled or delayed in 2025 alone and $130 billion more in Q1 2026, alongside a New York State executive order restricting large data-center builds. The hosts characterized this less as a sign AI investment is ending and more as political noise ahead of November's U.S. midterms, expecting the industry to work around it via legislation enabling on-site power generation.

The third was conflicting news from ASML and CoreWeave. ASML posted strong results and guidance showing bookings locked in through the end of 2027, said it would raise equipment prices even over TSMC's objections, and its U.S. ADR gained about 2%. Meanwhile, AI-focused cloud firm CoreWeave was reported to be considering derivatives to hedge against falling chip prices, reigniting semiconductor-peak worries. The hosts likened ASML's results to "cash already in hand" versus CoreWeave's hedging talk as an unrealized "promissory note," arguing the confirmed figures should carry more weight.

Separately, Apple was reported to be exploring acquisitions of chip startups after reported performance issues with its in-house M2 Ultra-based AI servers. This was read as a move toward greater hardware self-sufficiency, especially given the incoming CEO's hardware background, with the hosts also noting the recent pattern of Apple shares rising when chip stocks correct.

LS Securities analyst Oh Rin-ah noted Korean cosmetics exports hit a record first-half high of $7 billion this year, up roughly 27% year-on-year. The domestic cosmetics market is fiercely competitive, with 30,000–40,000 brands and very short product life cycles — meaning brands that survive it are competitive enough to succeed anywhere globally.

Because individual brand fads fade quickly, she argued investors should focus on ODM/OEM manufacturers such as Kolmar Korea, Cosmax, and Cosmecca Korea rather than individual brands. Profitability at these firms is improving markedly, with skincare-segment operating margins rising from the typical 10–11% to over 15% recently, and Kolmar Korea and Cosmax continue to hold their position among the global top three alongside Italy's Intercos.

Hair care was flagged as the next growth driver, still in its early stages with triple-digit growth in the U.S. market — LG H&H's anti-hair-loss shampoo Doctor Groot ranks third in Amazon's hair-regrowth category, while Amorepacific's Mise en Scène hair essence oil ranks first. Risks flagged for the road ahead include the rise of in-clinic procedures as a competitor offering more definitive results than cosmetics, and rapidly improving product planning by Chinese brands. A pending U.S. K-beauty ETF application was also noted as a potential positive for fund flows if approved.

The program noted relief from a U.S. CPI print that came in below market expectations. The market's belief that May's inflation peaked on oil-price effects was confirmed in June's data, with the decline larger than expected — driven mainly by transportation costs, about 30% of the CPI basket, falling over 5% as energy prices dropped.

Continued price stability would weaken the case for urgent rate hikes and could ease pressure on rate-sensitive tech and AI sectors reliant on capital access. However, rising costs in items like auto repair and food were flagged as possible signs of labor-market softening, with the U.S. ADP private payrolls print coming in at 190,000, below the prior 210,000. The hosts said that if both inflation and employment cool simultaneously, rate-hike concerns could recede sharply and shift the market's overall tone.

The Bank of Korea's Monetary Policy Board unanimously raised the base rate 25bp, from 2.50% to 2.75%, ending eight consecutive holds. The policy statement cited improved growth and rising prices as grounds to continue tightening, and Governor Shin Hyun-song said the bank would monitor how recent chip-price swings affect growth.

The market had largely priced in this move, and bonds reacted with only a modest firming, showing little shock. However, assessments suggested the signal on the pace and scale of further hikes was less clear than hoped, leaving somewhat greater uncertainty over the policy path ahead. Attention turns to the afternoon's F4 (macroeconomic and financial meeting) for any additional messaging.

Park Si-dong argued that today's 25bp hike clearly signaled further tightening ahead but did little to actually reduce uncertainty. He said he personally would have preferred a 50bp "big step" hike, believing it would have cut market uncertainty more effectively. With Korea's base rate having lagged the U.S. rate and pressured markets like the currency, he judged that moving faster during the normalization process would have been the better call.

He went on to warn that rising rates will push up loan rates and increase interest burdens on self-employed people and vulnerable groups, arguing that fiscal policy must accompany the hikes to offset this. His personal view was that increased tax revenue should be used to support vulnerable populations alongside the rate normalization.