The Memory Chip Supercycle: How AI Drives the Valuation of Samsung and SK Hynix

The South Korean semiconductor industry has reached a historic inflection point. In early February, Samsung Electronics and SK Hynix — the two largest chip manufacturers in South Korea — accumulated a combined market capitalization of $1.11 trillion. This significant increase in valuation reflects a fundamental shift in how global technology perceives memory components, transforming them from simple secondary parts into strategically important assets in the era of artificial intelligence.

Memory Chips: From Obscurity to Central Strategy

Just a few years ago, memory chips were considered disposable components used in personal computers and mobile devices. However, the sudden surge in investment in AI infrastructure has radically changed this paradigm. As Yiping Liao, portfolio manager at Franklin Templeton Global Investment, explains, South Korea’s focus on specific segments of the tech supply chain has driven the extraordinary rise in the stock prices of both companies.

This change is not temporary. According to Simon Woo, head of Korea research at BofA Global Research based in Seoul, the sector is experiencing an unprecedented cycle of shortages. South Korean chip companies are now key suppliers for global tech giants like Nvidia, positioning themselves at the heart of the global supply chain.

An Extraordinary Cycle: Projections Through 2027

Optimism about the future of these components is remarkable. Woo projects that the memory chip supercycle could extend until 2027, supported by sustained demand from U.S. tech giants that require these elements as fundamental infrastructure for AI systems.

This long-term outlook contrasts with previous cycles. Timothy Moe, chief Asia-Pacific equity strategist at Goldman Sachs, estimates that the semiconductor sector will contribute approximately 60% of the expected earnings growth for South Korean stocks during this year. This concentration of return potential underscores the critical importance that memory chips have gained in the region’s corporate profit portfolio.

The transformation of chips into strategic assets has permanently elevated the status of the South Korean memory industry, solidifying companies like Samsung and SK Hynix as pillars of the global tech ecosystem.