Kicked out by SK Hynix! "Korean Chip Bear Specialist" Morgan Stanley is struggling to survive in South Korea
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Today, the Korean stock market fell into the “ICU” again.
SK Hynix and Samsung Electronics both fell over 7% intraday, and the Seoul Composite Index dropped more than 6% at one point, triggering a circuit breaker. According to media reports, the trigger for the plunge was related to the "Korean Semiconductor Grim Reaper" — Shawn Kim, Morgan Stanley Asia-Europe Tech Research Head.
He released a report on July 21 warning that the semiconductor memory industry driven by AI mania is approaching an inflection point, with memory contract prices expected to peak in the fourth quarter, and net profit upward revision rates have fallen from a peak of 92% to 77%. Some analysts say Shawn Kim’s report was used to spark panic, but wasn’t actually the cause of the downturn.
This time, however, Shawn Kim’s report not only stirred the market, but also put Morgan Stanley itself in a more awkward position.
Morgan Stanley’s situation in Korea is becoming increasingly delicate.
This top Wall Street investment bank has long published bearish reports on Korean semiconductors and is now facing consecutive setbacks in the Korean market — from being excluded from the list of lead underwriters for SK Hynix’s US listing, to several major deals falling through, its business in Korea is under growing reputational and commercial pressure.
The most iconic event this time is SK Hynix’s ADR listing project in the US, worth about $26.5 billion. Bank of America, Citigroup, Goldman Sachs, and JP Morgan were selected as joint lead underwriters, while Morgan Stanley was the only top-tier investment bank to be left out. At a 0.5% underwriting fee, total commission for this IPO is around $130 million. For a bank that prides itself on working on “super IPOs” like SpaceX and Anthropic, and is considered a potential lead underwriter for OpenAI’s IPO, this exclusion isn’t just a financial loss—it’s a direct blow.
Repeatedly Bearish, Nicknamed the “Korean Semiconductor Grim Reaper”
In Korean investment circles, mentioning Morgan Stanley’s research division inevitably brings up Shawn Kim. This Korean-American Managing Director joined Morgan Stanley in 2002, and is now in charge of European and Asian tech research, having worked in Seoul and Hong Kong, and now living in London. In the Korean market, he has built considerable influence with a series of strongly worded semiconductor reports, and earned the nickname "Korean Semiconductor Grim Reaper".
Over the past decade, he has repeatedly issued warnings at the peaks of the Korean semiconductor cycle: In 2017, a bearish report on NAND prices and memory oversupply; in August 2021, "Memory, Winter is Coming", which precisely anticipated a two-year semiconductor downturn; in September 2024, his report on possible HBM oversupply was considered one of the triggers for that year’s sharp declines in Samsung Electronics and SK Hynix stock prices — Morgan Stanley later admitted its short-term forecasts for SK Hynix were incorrect. Korean media even call him the "Korean Semiconductor Grim Reaper".
On July 6, Morgan Stanley’s Chief Investment Officer Michael Wilson led a stock strategy team to recommend reducing holdings of memory semiconductor stocks like Samsung Electronics, SK Hynix and Micron. With the market already under downward pressure, Korean industry described this as "rubbing salt into the wound".
Shawn Kim's latest report is more systematic: NAND module makers’ inventory has risen to about 13 weeks, close to the peak of about 15 weeks during the pandemic; spot prices are weakening; some cloud service providers have ample inventory, with Tencent reportedly having stockpiled about 90% of its needs (the source and methodology of this data have not been officially confirmed). He also proposed the trading logic "sell DRAM when NAND is going down”, bringing both segments into the same cyclical narrative.
Nevertheless, Morgan Stanley US semiconductor analyst Joseph Moore holds a more optimistic view — he believes that AI data center investment will make D memory the core bottleneck, and supply shortages may last until 2028. The root of their disagreement is a difference in perspective: Joseph Moore focuses on capital spending by American large cloud providers, while Shawn Kim pays more attention to early warning signals in Asian distribution channels.
After Being Rejected by SK Hynix, Morgan Stanley Reflects: Korean Semiconductors Are Not to Be Messed With
SK Hynix’s ADR listing is the largest IPO of a foreign company in US history. Morgan Stanley's absence triggered direct ripple effects internally.
According to several bankers (including former Morgan Stanley executives), the Seoul office is now filled with an emotion:
“Did we lose the SK Hynix deal because of Shawn Kim’s negative reports, and should we be more cautious in the future?”
This emotion has also spread to Morgan Stanley’s lines of business responsible for fundraising from Korean institutional clients. According to Korean media, complaints have surfaced in these departments:
“How can we do business like this?”
This split reflects a structural dilemma that international investment banks face: the tension between the independence of research departments and the commercial interests of investment banking. If research reports are perceived as manipulation for business purposes, credibility is damaged; but if self-censorship occurs out of concern for client relationships, research value is lost.
A manager from a large domestic investment institution commented, "Morgan Stanley has suffered repeated setbacks in Korea, and recently seems to have entered a period of self-reflection. The sole exclusion from the SK Hynix listing project is a heavy blow."
Trouble Is Not Singular: Multiple Major Deals Have Fallen Through
The SK Hynix project is not a one-off. Several deals that Morgan Stanley recently participated in or led in Korea have failed to end well.
The most notable among them is the controversy related to SpaceX's IPO. According to Korea’s well-known brokerage Mirae Asset Securities, between June 5 and 10 it applied for $1.14 billion worth of shares via Morgan Stanley’s lead underwriter system and received a “confirmation” receipt, but ultimately received zero allocation. Mirae Asset internally suspects that Morgan Stanley missed its application when handing over work to joint lead underwriter Goldman Sachs. Since IPO allotment rights are entirely at the discretion of underwriters, Mirae Asset cannot formally hold them accountable. According to a Bloomberg report on June 30, Mirae Asset’s procedural error led to the allocation failure. On July 14, Mirae Asset filed a civil suit against Bloomberg, escalating the matter into a legal fight between a major domestic brokerage and an international media outlet. Korea’s Financial Supervisory Service has completed an on-site inspection, with results expected within months.
Another similarly awkward case is the IGIS Asset Management sell-off led by Morgan Stanley and Goldman Sachs. IGIS is Korea’s largest real estate asset manager, overseeing 73 trillion won, including 2 trillion won entrusted by the national pension fund. In December last year, the two banks listed Singapore institution Hillhouse Capital as the preferred buyer, but Hillhouse dropped out due to financing issues. Competing buyers subsequently reported to police that price information was unilaterally leaked to Hillhouse during negotiations, involving IGIS controlling shareholders and Morgan Stanley staff, totaling five people. Meanwhile, details of the national pension fund's entrusted investments were reportedly leaked during due diligence, drawing regulatory attention.
Earlier cases trace back to 2017 and 2018, when Morgan Stanley published a report predicting Celltrion’s stock price would halve, causing a market uproar. Celltrion questioned the credibility of the report, and there were suspicions linking the report to short-selling activity.
A Deeper Dilemma: Research Independence vs. Commercial Interests
This storm reflects a structural dilemma faced by global investment banks:
The independence of research departments versus the commercial interests of investment banking divisions — there is an inherent tension.
If research reports are viewed as business-motivated manipulation, credibility is damaged; but if self-censorship happens for the sake of client relationships, research value is lost.
For Morgan Stanley, controversy around Shawn Kim’s reports isn’t simply “bearish views leading to retaliation”. In retrospect, bearish judgments in 2017 and 2021 proved somewhat prescient; in 2024, forecasts about HBM were less accurate. His influence is rooted in the fact that semiconductors are classic cyclical industries — when optimism peaks, contrary warnings can prompt overseas investors to reallocate holdings and trigger real shocks to the Korean stock market.
From a valuation perspective, Samsung and SK Hynix’s price-to-book ratios have fallen to about 1.7x and 2.5x, noticeably below recent peaks but still above their long-term historical averages. This valuation band reflects the market’s neutral pricing logic that “the memory industry is neither purely cyclical, nor has the AI narrative fully materialized”.
The latest report of July 21 has a more detailed methodology: using NAND module inventory weeks, proportion of profit upward revision, contract price growth rate, and other cross-referenced signals to build a judgment framework for prices peaking in the fourth quarter. Morgan Stanley estimates HBM supply growth at about 40%, and the report also includes a long-term addressable market of about $25 billion for memory innovation, covering capacity, bandwidth, and power consumption.
A banker summed it up directly: "For investment banks, transaction success records are the core performance indicator. The accumulation of failures inevitably becomes a burden."
Morgan Stanley's current predicament in Korea may be the most realistic annotation of this logic.
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