South Korea’s chip giants post strong profits but face market selloff

South Korea has had the world’s hottest stock market over the past year, with the Kospi Index surging 165% thanks to the country’s two semiconductor powerhouses, Samsung Electronics and SK Hynix.

That’s causing some problems—and could cause more if the past week’s tech stock downturn continues.

Samsung and SK Hynix, along with U.S.-based Micron Technology, dominate the global market for advanced memory chips. Hyperscalers rushing to build artificial-intelligence capacity are paying virtually any price for their products. Samsung’s operating profit soared more than sevenfold year over year in its latest earnings report.

“This is new territory,” says Gi-Wook Shin, director of Stanford University’s Korea Program. “It’s creating a lot of issues within Korea.”

The most immediate issue has been engineers pushing for their slice of the pie. Faced with a strike late last month, Samsung agreed to a profit-sharing deal that could see bonuses in the memory-chip division reach $400,000 this year, estimates James Lim, portfolio manager for Korea at Dalton Investments. SK Hynix quietly reached a similar settlement late last year. Barrons