Enjoying the AI boom together, why is Samsung lagging behind SK Hynix?

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As global AI momentum continues to heat up, South Korea’s two major memory chip giants have taken completely different paths in the market.

On Monday, SK Hynix’s stock price surged 12.5%, setting a new all-time closing high, with its market capitalization breaking 100 trillion won for the first time; Samsung Electronics also rose about 5% but by less than half the rate of SK Hynix. This divergence is not accidental—last month, their performances differed by more than 25 percentage points.

Analysts point out that the strike threat led by Samsung’s union is becoming a key factor suppressing its stock price, prompting investors to remain cautious on Samsung as they bet on AI memory demand.

On April 30, Citigroup analysts lowered Samsung’s target price from 320,000 won to 300,000 won, citing increasing labor disputes that may erode profits. Meanwhile, BofA Securities raised SK Hynix’s target price and noted in a research report that Samsung’s potential strike could even create a more favorable chip pricing environment for SK Hynix.

Strike threat unresolved, Wall Street evaluates cautiously

According to a previous article by Wallstreetcn, Samsung's union held a rally on April 23, demanding that 15% of the chip division’s operating profit be distributed to employees and threatened an 18-day strike starting May 21. Previously, the union had rejected management’s proposal—which included allocating 10% of operating profits to a bonus pool and a 6.2% salary increase.

Samsung CFO Park Sooncheol stated in last week’s earnings call that the company is handling labor issues legally and will prioritize resolution through dialogue. He also said that even if a strike occurs, the company will mitigate production disruptions through dedicated teams and emergency mechanisms within legal frameworks.

Stanley Tang, Senior Fund Manager at Sumitomo Mitsui DS Asset Management, said, “The market is still optimistic about AI-driven high-bandwidth memory demand, but remains wary of Samsung’s potential strike.” He noted MediaTek and ASE Technology Holding both jumped nearly 10%, “only Samsung is lagging behind the market.”

The shadow of the labor dispute, combined with Samsung’s competitive disadvantage in the high-bandwidth memory (HBM) field, makes its situation even more complex. SK Hynix established a lead last year in the lucrative HBM chip market, while Samsung is still catching up, and the threat of the strike undoubtedly adds new uncertainty to its recovery efforts.

The Citigroup analyst team led by Peter Lee, when lowering the target price, said that although they view Samsung as a long-term beneficiary in the memory market, “bonus-related provisions from intensified labor disputes” may erode profits, cutting their operating profit forecasts for this year and next by 10% and 11%, respectively.

Lee stated in the report: “We maintain a conservative stance on short-term earnings visibility.”

In contrast, SK Hynix already reached an agreement with its union last September, agreeing to allocate 10% of annual operating profits to the bonus pool, successfully defusing the risk of a strike and setting a precedent for Korea’s tech industry. BofA Securities analyst Simon Woo wrote in a research note that they have assumed Samsung will start provisioning for special employee bonuses in the second quarter, and that Samsung’s potential strike might further improve SK Hynix’s chip pricing environment.

Citigroup believes that if Samsung’s labor tensions continue to escalate, short-term cost pressures will keep suppressing its earnings, and the valuation gap between the two companies faces further expansion risk.

Strong fundamentals but lingering concerns

It is worth noting that Samsung’s fundamentals themselves are not weak. Its semiconductor division posted historic profits in the first quarter this year, driven by AI data center orders, with operating profit soaring 48 times year-on-year, exceeding market expectations.

Citigroup points out that the robust memory cycle aligns with market consensus; memory supply shortages are expected to intensify by 2027, and medium- to long-term fundamentals remain solid.

However, strong performance has not fully offset the discount from labor risks. While AI stocks are broadly rallying and peers are hitting new highs, Samsung’s relatively sluggish stock performance reflects market skepticism about whether it can overcome this internal hurdle. For investors, whether Samsung can resolve the labor dispute before the May 21 strike deadline will be the key observation point to judge if it can catch up with SK Hynix again.

Risk Warning and DisclaimerThe market has risks, investment requires caution. This article does not constitute personal investment advice, nor does it take into account individual users’ specific investment goals, financial status, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article fit their particular situation. Investments based on this are at your own risk. ```