Despite a 14 Trillion Won Sell-off by Foreign Investors, the Semiconductor Supercycle Continues
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Shocking Numbers in the Korean Stock Market
A shocking figure has emerged in the Korean stock market. In November alone, foreign investors net sold 14.4562 trillion won worth of stocks on the KOSPI. This surpasses the previous record of 12.5174 trillion won during the severe COVID-19 shock in March 2020. However, the securities industry is drawing attention by analyzing that this large-scale sell-off is likely to be a temporary phenomenon.
The foreign sell-off was particularly concentrated in the semiconductor sector. SK Hynix ranked first with 8.7309 trillion won, and Samsung Electronics followed with 2.2292 trillion won in sell-offs. Notably, SK Hynix saw a staggering 13.2437 trillion won sold in just the past two months, a significant portion of the company’s market capitalization.
What’s intriguing is the reason behind the concentrated sell-off in SK Hynix. The market analyzes that it is due to the perception that SK Hynix is part of the ‘OpenAI camp.’ Concerns about a shift in the AI supremacy competition seem to be reflected, as Google’s recently unveiled chatbot ‘Gemini 3’ surpassed ChatGPT 5 in major benchmarks and showed clear improvements in model training efficiency.
A Perfect Storm Created by AI Bubble Theory and Exchange Rate Volatility
Looking more closely at the background of foreign sell-offs, foreign investors continued to net sell domestic stocks from the beginning of the year until April when tariff uncertainties were highlighted. However, the atmosphere changed from May, showing a consistent net buying trend. Particularly in September and October, they net bought about 13 trillion won, turning to a net buying position for the year, but returned to a net selling position with the large-scale sell-off in November.
Two major reasons can be cited for this drastic change. The first is the resurgence of the AI bubble theory, and the second is the increased volatility of the won-dollar exchange rate. As profitability controversies over AI investments resurfaced, negative views on related stocks grew, and at the same time, instability in exchange rates led to capital outflows from emerging markets.
However, Kim Jae-seung, a researcher at Hyundai Motor Securities, analyzed, “While the profitability controversy of AI investments will continue, investment in AI infrastructure is expected to continue until 2028.” This implies a still favorable environment for domestic semiconductor companies. In fact, the global AI infrastructure investment is expected to more than double from about $200 billion in 2024 to over $400 billion in 2028.
More interesting is the analysis of historical patterns. Researcher Kim pointed out, “The foreign ownership ratio of the KOSPI tends to increase during semiconductor supercycles.” Currently, the foreign ownership ratio of the KOSPI is only at the average level since 2001, at 35%. Considering the semiconductor supercycle, there is ample room for additional foreign purchases.
New Opportunities Created by Exchange Rates and Liquidity
Researcher Yeom Dong-chan from Korea Investment & Securities provided a more specific analysis from the exchange rate perspective. “The period when U.S. funds have been net selling domestic stocks for more than six months has always been during times of won strength below 1,200 won to the dollar,” he said. In the current situation where the won is relatively weak, there is limited practical benefit for U.S. funds to trendily reduce their domestic stock proportion.
As of December 1, 2025, the won-dollar exchange rate is moving in the 1,400 won range, much higher than the 1,200 won range where large-scale sell-offs occurred in the past. This means it could be a relatively attractive entry point for foreign investors.
Additionally, the easing of U.S. liquidity tightening is also a positive factor. The U.S. Federal Reserve is concluding its interest rate hike cycle, and global dollar liquidity is gradually improving, enhancing the conditions for capital inflow into emerging markets.
The fundamentals of the memory semiconductor market remain solid. DRAM prices are showing an upward trend from the second half of 2024, and particularly, the High Bandwidth Memory (HBM) market is experiencing explosive growth. SK Hynix holds about a 50% market share in the HBM market and is expected to generate over 30% of its revenue from HBM by 2025.
The same goes for Samsung Electronics. Having recently succeeded in mass-producing HBM3E, it has acquired the qualification as a supplier to NVIDIA, with substantial revenue contributions expected to begin in 2025. The proportion of HBM in the overall memory market is projected to surge from 3% in 2023 to over 15% by 2027.
The securities industry expects foreign inflows to recover from December, synthesizing these factors. There is a high possibility of position rebuilding centered on large semiconductor stocks. Some analyses suggest that the large-scale sell-off in November actually provided an attractive entry opportunity.
Of course, there are risk factors. The slowdown of the Chinese economy, intensifying U.S.-China tech supremacy competition, and ongoing doubts about AI investment profitability can still act as burdens. However, from a long-term perspective, experts commonly agree that the increase in semiconductor demand driven by digital transformation and AI innovation is a structural trend.
Personally, I view this foreign sell-off as having more characteristics of portfolio rebalancing than simple panic selling. It is likely a temporary phenomenon occurring during year-end settlements and the process of establishing next year’s investment strategies, and it could actually be an opportunity for fundamentally solid, high-quality semiconductor companies. Companies with competitiveness in high-value-added products like HBM are likely to receive even higher valuations in the long term.
This article was written after reading an article from Hankyung Korea Market and adding personal opinions and analysis.
Disclaimer: This blog is not a news medium, and the content written is the author’s personal opinion. The responsibility for investment decisions lies with the investor, and no responsibility is taken for investment losses based on the content of this article.
