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South Korean chip shares rally after Micron’s upbeat earnings

South Korean chip stocks surged on June 25 after Micron Technology reported record fiscal Q3 revenue of $41.46bn, well above analyst expectations, and guided Q4 above Wall Street estimates while forecasting tight AI memory supply through 2027. Samsung Electronics rose 5.3% and SK Hynix jumped 9.2%, together lifting the KOSPI by about 4.1%. SK Hynix also filed for a Nasdaq ADR listing targeting up to $29bn — potentially the largest ADR offering on record — earmarked entirely for chip capacity expansion. Samsung separately weighed a ~$58.6bn share buyback for employee stock bonuses. The rally spread to Tokyo, with Advantest, Tokyo Electron, and Kioxia all gaining sharply. High-bandwidth memory, which feeds Nvidia's AI accelerators, remains the key driver, with SK Hynix holding the supply lead and Samsung still qualifying its HBM for Nvidia.

Samsung plans a 90 trillion won buyback to fund a chip-worker bonus

Samsung Electronics is planning a 90 trillion won share buyback over three years, primarily to fund a profit-linked bonus for workers in its Device Solutions semiconductor division. Under a pay deal reached after union negotiations, 10.5% of operating profit will be distributed as shares to chip division staff. The buyback is needed to acquire treasury stock for distribution. The total bonus cost including withholding taxes is estimated at 154 trillion won. Beyond the wage settlement, the large repurchase also addresses the 'Korea discount' — the persistent gap between Korean conglomerate asset values and share prices — by delivering the kind of capital returns foreign investors have long demanded. SK Hynix has meanwhile overtaken Samsung as Korea's most valuable listed company, driven by its lead in high-bandwidth memory for AI accelerators.

South Korea is in talks with Samsung and SK Hynix over a second chip cluster

South Korea's government is in active talks with Samsung and SK Hynix about building a second large-scale chip manufacturing cluster, driven by explosive AI-fueled demand for memory chips. A presidential adviser indicated that AI orders could accelerate construction timelines by over a decade, potentially bringing new capacity online by 2034–2035. The key challenges are finding a suitable site with adequate land, power, and water, and aligning with President Lee Jae-myung's regional development goals. No financial figures have been officially confirmed, though Korean media reports suggest investments could reach hundreds of trillions of won. The chip boom is also raising domestic policy debates about wealth distribution, housing inflation risks, and labor relations.

South Korea chip bonuses flagged as inflation risk

South Korea's central bank has flagged inflation risks from massive profit-linked bonuses at Samsung Electronics and SK Hynix, driven by the AI memory boom. Bloomberg Economics projects the combined bonus pool will grow from 4 trillion won ($2.7B) in 2026 to 30 trillion won by 2028, with individual workers potentially earning up to $454,000–$477,000 each. The Bank of Korea warns these payouts could trigger a 'wage domino' across industries, inflate real estate prices in the semiconductor belt, and push inflation above its 2% target. Unions at Hyundai Motor and HD Hyundai Heavy Industries are already demanding similar profit-sharing arrangements. BOK Governor Shin Hyun-song has signaled a rate hike is likely within the year.