Stock Market Shaken by Surge in U.S. Long-Term Yields… Micron Earnings and Memory Prices to Determine Semiconductor Outlook

Domestic equities showed a mixed performance on September 30, after opening on a firm note, with gains and losses diverging after 11 a.m. Intraday, the KOSPI moved around 6,864, down about 0.09%, while the KOSDAQ traded around 855, up in the 0.6% range. Foreign investors shifted from early net buying in the cash market to net selling, recording net sales in the main board, the KOSDAQ and the futures market.

By the afternoon, the KOSPI was reported around 6,852, down about 0.2%, while the KOSDAQ was around 857, up about 0.8%. Samsung Electronics fell about 1.2%, while SK hynix held gains of more than 1%. Energy-related stocks, semiconductor materials, components and equipment, and optical communications stocks were relatively strong. In the U.S. market, major indexes fell as long-term yields rose but pared their losses late in the session.

Micron’s earnings announcement and Federal Reserve officials’ remarks were identified as key variables for the week. Fed officials are scheduled to speak throughout the week, and comments from more hawkish members in particular could affect rate expectations. Alongside assessments that the domestic market held up relatively well amid external volatility in September, attention turned to the market’s direction in October.

Micron Technology shares closed higher a day before the company’s earnings announcement. The market is watching not only the results themselves, but also how long AI demand will last, whether current margins can be sustained and how the company views the memory market. Following SK hynix and Samsung Electronics, Micron is seeking to catch up in the market cycle, and its outlook could serve as an indicator of demand and pricing trends for conventional DRAM.

TrendForce said memory prices could rise further due to constraints on HBM supply, with the shortage potentially continuing through 2027. HBM production requires more wafers than conventional DRAM, so increasing the share of production devoted to HBM could also reduce the supply of conventional DRAM. A forecast cited in the broadcast said HBM average selling prices could rise 121% in 2027, citing a higher share of premium products and supply shortages.

Reports also said some customers are considering 8-high products instead of 12-high products to reduce HBM prices and costs. Reducing the number of HBM stacks can lower memory costs and cut the overall bill of materials for GPUs, but it remains to be seen whether this will alter the broader trend of constrained memory supply and rising prices. Samsung Electronics and SK hynix could benefit from price increases driven by expanding HBM demand, but it is also important to assess whether the big tech companies buying memory have the cash flow to absorb higher costs.

Recent earnings growth at memory companies has been driven not only by higher shipments but also significantly by price increases resulting from supply constraints. Estimates presented in the broadcast put Samsung Electronics’ DS division operating profit at about KRW 8.9 trillion in the second quarter and around KRW 11 trillion in the third quarter. SK hynix’s operating profit is projected to rise from about KRW 6.1 trillion to the mid-to-high KRW 7 trillion range. When HBM prices were substantially higher than DRAM prices, companies with a greater HBM share stood out. Later, as conventional DRAM prices rose, Samsung Electronics and Micron also saw their earnings improve.

HBM and conventional DRAM share production resources. Increasing HBM production reduces conventional DRAM output and pushes up its price. When conventional DRAM prices are already high, manufacturers have less incentive to shift further production to HBM, potentially limiting future HBM supply growth. This has led to forecasts that prices for the two memory products could rise in tandem as they affect one another. The sustainability of the market cycle, however, depends on whether big tech customers can absorb higher prices and whether AI investment translates into revenue and cash flow.

Expectations for expanded AI chip production have spread to semiconductor materials, components and equipment, as well as back-end processing. As AI chips become more complex, the importance of back-end processes, including packaging, increases. If Samsung Electronics focuses its production capacity on HBM, expanded outsourcing of back-end processing for conventional DRAM could create opportunities for related companies. Securities firm reports mentioned Hanyang Digitech, SFA Semicon and Dreamtech, while U.S. semiconductor equipment and optical communications stocks also gained, alongside a rise in South Korea’s Jusung Engineering.

The U.S. 30-year Treasury yield touched 5.6% intraday, reaching a 24-year high, while the 10-year yield was also said to have risen to around 5.3%. The two-year yield remained near its high as well. The Conference Board’s consumer confidence index and job openings came in weaker than expected, prompting short-term yields to fall at one point on concerns about an economic slowdown. Long-term yields, however, rose amid increases in yields on government bonds in other major economies and supply-related pressures.

New York Fed President John Williams said that if the economy evolves as expected, there is no need to rush to raise interest rates. Williams, who has recently made hawkish comments, again emphasized a cautious approach. The weight attached to his position as New York Fed president also led markets to partially ease their tightening concerns. The probability of an October rate hike implied by rate futures fell from the 70% range the previous day to around 47%, while the probability of a hold rose to around 52%. However, given the large day-to-day swings, these figures should not be treated as a definitive forecast.

Government bond yields have risen outside the United States as well, weakening the relative appeal of Treasuries. Japan’s 10-year yield exceeded 3%, while European fiscal and political concerns, including France’s credit rating downgrade, also weighed on bond markets. Concerns were also raised that if Anthropic issues more corporate bonds as it plans to invest more than $500 billion in AI computing infrastructure over the coming years, it could compete with government bonds for investor funds.

Korea Premium Week, the country’s largest corporate investor relations event, opened for the first time and will run for three weeks through October 16. Investor briefings that had previously been held separately by each company have been brought together and organized by week. The president, the Financial Services Commission chairman and the Korea Exchange chairman also attended. Participants include Samsung Electronics, SK hynix, Doosan Enerbility, Hanwha Aerospace, Samsung Biologics and Shinhan Financial Group. KOSDAQ-listed participants include Dalba Global, Robotis, E T Pharm, Samyang Foods, PharmaResearch and LegoChem Biosciences.

The event raised plans to draw up a roadmap by October 2026 to shorten the settlement cycle from T+2 to T+1, as well as a proposal to open a Korea Exchange premarket from the end of 2027. The current after-market operates from 4 p.m. to 8 p.m. Media reports described a proposal discussed at a KOSDAQ tiering session to classify companies based on stability, growth and market valuation, and place them in an upper segment. Expectations were also reflected in some stocks, with Robotis shares rising following news of its participation.

Reports said President Trump could personally announce South Korea’s U.S. investment plan in Alaska on September 30, U.S. local time. The Alaska LNG project was mentioned as a possible part of the announcement, and South Korea’s market saw movement in pipeline steel and other steel stocks, pipe fittings and valve makers, and some shipbuilders. Attention also focused on the scale of South Korea’s U.S. investment and the possibility that the projects could be used as a political achievement during the U.S. midterm election cycle.

The investment principles reported to the National Assembly retain an overall cap of $200 billion and an annual level of $20 billion. The first project was said to be a Texas gas-fired combined-cycle power plant worth about $22.3 billion, slightly above the annual limit, with the possibility of adding nuclear power projects later. About eight nuclear reactors are expected, and a proposal to build two of them using South Korea’s APR1400 model was mentioned, although specific timelines and locations have not been determined.

South Korea was reported to have secured an umbrella investment structure that manages the profits and losses of multiple projects together, rather than calculating the returns of each project separately. The proposed profit-sharing principle is a 50-50 split between the United States and South Korea during the principal and interest repayment period, after which the United States would receive 90% of the profits. There was also discussion of extending the 50-50 sharing period beyond the 20 years previously indicated. Westinghouse’s equity stake, voting rights and board participation were reportedly still undecided.

Financial authorities are investigating finance industry figures formerly affiliated with a Seoul National University investment club on suspicion of using nonpublic information about mergers and acquisitions to make more than KRW 20 billion in illicit gains. About 10 people, including family members and acquaintances, are suspected of using the information to trade stocks, and a joint response team reportedly identified about five related stocks. The main suspects shared information through their ties from participating in the club together. Those reportedly involved also include employees of KOSDAQ-listed companies and people linked to funds.

Lee Kwang-soo said the issue was not participation in an investment club or interaction among alumni, but the private sharing of nonpublic information obtained through professional duties and trading with family members and acquaintances to make a profit. He argued that if networks in the investment industry and club connections led to information sharing and coordinated trading, the investigation should examine the entire industry rather than focus on a single university. He also noted that profits of around KRW 20 billion from roughly five transactions could indicate that large bets had been made.

Lee stressed that stock and asset markets function on the basis of investor trust and that the use of nonpublic information must be investigated rigorously. He said investigators should examine industry practices and the channels through which information was passed to prevent an insular culture in the financial sector from leading to illegal activity, and that accountability must be clear if violations are found. He said the investigation should be an opportunity to root out practices that undermine market confidence.

Lee Kwang-soo said Korea Premium Week could be meaningful if it establishes itself as a venue for introducing quality companies that are less familiar to investors. He said the event would be more useful if it gave companies with solid earnings and competitiveness but insufficient market attention an opportunity to present, rather than focusing on already well-known firms such as Samsung Electronics. He stressed that the event should also set out concrete timelines for long-awaited market measures, including KOSDAQ delisting and tiering, market revitalization measures and the shift to T+1 settlement.

Lee opposed the push for 24-hour trading, saying the purpose of extending trading hours must first be made clear. If foreign investors are not unable to buy Korean stocks because trading hours are too short, he said, it is necessary to assess who would benefit and how. Citing Taiwan’s larger market capitalization than Korea’s despite its shorter trading hours, he said extending trading hours should not take priority while delaying the institutional reforms the market expects.

Lee Kwang-soo said comments from Fed officials should not be treated as equivalent to official rate decisions, but should be read as signals that can moderate excessive market moves between official meetings. He said investors should consider why hawkish and dovish comments differ, the speaker’s position and the direction in which the market is leaning. He interpreted Williams’ cautious remarks as a message delivered as market yields approached levels that could concern the Fed, with the 30-year yield surging to 5.6%.

Lee said that if market yields rise sharply ahead of the policy rate, financial conditions are already tightening, potentially reducing the need for the Fed to raise its policy rate further. If inflation slows as expected, there would also be less reason for the Fed to overreact preemptively. However, with rate-hike probabilities changing sharply in a single day, he said investors should remain cautious rather than base investment decisions on short-term forecasts until the direction becomes clearer.

Lee noted that in a structure where AI investment fuels inflation, rate hikes may not curb demand as they have in the past, and higher financing costs could be passed on to the prices of goods and services. In the long run, he said, productivity gains and technological innovation may exert more downward pressure on inflation than interest rates. He argued that stabilizing the supply and demand for U.S. Treasuries should also have been discussed, including whether President Trump could use his meeting with Chinese President Xi Jinping to prevent China from selling U.S. Treasuries or encourage it to buy them.

Lee Kwang-soo said investors should shift their focus from immediately debating whether memory prices have peaked, as in the past, to assessing how long earnings can be sustained. He said past forecasts that HBM prices would fall failed to sufficiently account for the decline in conventional DRAM production and the resulting price increases, because they focused only on HBM production expansion. Going forward, he said, investors should consider HBM and DRAM prices, the allocation of production between the two products and the returns big tech companies generate from AI investment.

Lee interpreted customers’ willingness to sign long-term contracts despite high prices as a possible sign that they are concerned about supply shortages and further price increases. He said the key question is whether memory companies can maintain high earnings beyond 2027 and sustain stable results even if their growth rates slow. If Nvidia’s high margins have resulted from sourcing HBM at relatively low prices, he said, rising HBM prices could also change how profits are divided between memory producers and their customers.

Lee suggested using the holdings of major semiconductor ETFs as a reference when looking for semiconductor materials, components and equipment stocks. He advised reviewing major holdings other than Samsung Electronics and SK hynix, and checking whether an ETF has recently increased a stock’s weight rather than focusing simply on the largest holdings. Rather than trying to discover a new, exceptional stock, he said, investors should pay attention to the choices of large pools of capital and shifts in supply and demand, while avoiding excessive risk-taking.

Lee Kwang-soo said the Alaska LNG project could push total investment beyond the overall cap if added to existing power plant and nuclear investment plans, and that its commercial viability was also uncertain. He said South Korean officials had been told only that the project could be considered, whereas if President Trump announced specific investment amounts and projects as though they had been finalized, the difference between the two sides’ positions could become an issue. He argued that safeguards should be put in place to prevent an announcement, even if it is merely a political act, from becoming a binding agreement.

Lee identified the question of who would use the output as the central risk for the LNG project. Shipping LNG liquefied in Alaska would be costly, and with limited LNG infrastructure in the United States, the actual buyers could be South Korea or Japan. He said that if South Korea had to fund development and also purchase LNG with high transportation costs, the project could be less profitable than power plant or nuclear investments.

Lee said decisions on the project should be delayed while environmental and working conditions, as well as the recovery of principal and interest, are examined closely. He said that even if South Korea cooperates to some extent with U.S. political announcements, the project’s commercial viability and profitability must be rigorously assessed before it reaches a stage where it becomes binding. He stressed that South Korea should not take on the burden of a high-cost project solely because there is domestic demand.

Lee Kwang-soo recommended that investors in their 40s who are beginning to prepare for retirement consider using a pension savings fund, taking tax benefits into account. He said they should check the restrictions on products available through pension savings funds and build both retirement savings and funds for their children primarily around index-based products with a long-term outlook, rather than short-term momentum stocks. On where to invest, he said it was also reasonable at this point to give greater weight to the domestic stock market.

Park Si-dong said retirement planning should be multi-layered, with private pensions supplementing the National Pension. He said it was important to review current expenses, such as children’s education costs, while making a retirement savings plan, and to invest consistently, even in small amounts. Those holding individual stocks should first set their investment goals and time horizon, then manage their holdings in line with a long-term plan.

Lee Kwang-soo said the Korean market should be driven not by people who make large sums using nonpublic information, but by individual investors who economize and invest consistently. He viewed positively the fact that the September market held up amid external volatility, even if it did not rise as quickly as expected. He stressed that market confidence must recover and conditions must be created in which retail investors can invest for the long term with confidence.