South Korea Semiconductor Sector Falls 34% in July, KB Securities Signals August Recovery as AI Chip Shortage Persists

According to KB Securities, the South Korean semiconductor sector fell an average of 34% in July due to excessive leverage liquidation and supply-demand shocks, but is expected to enter an earnings-driven bull market starting in August. The recovery will be driven by major global tech companies' continued AI investments and structural supply-demand imbalances.

KB Securities noted that as of Q3 2026, memory and AI chip fulfillment rates for major tech customers stand at only 60-70%, with unmet demand rolling over annually. New production line completion typically requires two to three years, making a supply shortage inevitable through 2028. The firm highlighted that Samsung Electronics and SK Hynix are trading at forward P/E ratios of 3.6x and 3.5x respectively, representing historical valuation lows.