Key Highlights
- Shares of Samsung Electronics plummeted 7% to ₩249,750 during Wednesday’s trading session amid a widespread semiconductor market downturn across Asian exchanges
- South Korea’s KOSPI index plunged over 6%, activating the Korea Exchange’s sell-side sidecar circuit breaker that temporarily froze program trading
- Escalating geopolitical tensions between the U.S. and Iran drove crude oil prices upward, increasing Treasury yields and weighing on global technology equities
- The South Korean tech giant has implemented price increases of up to 15% for advanced foundry manufacturing services, with its SF4 and SF5 nodes experiencing the largest adjustments
- The company’s contract manufacturing division, which has posted losses since 2022, may achieve profitability next year if current pricing levels persist
Shares of Samsung Electronics experienced a sharp 7% decline to ₩249,750 on Wednesday, swept up in a comprehensive semiconductor sector selloff that dragged South Korea’s KOSPI index down more than 6%.
Samsung Electronics Co., Ltd., SMSD.L
The Korea Exchange triggered its sell-side sidecar circuit breaker mechanism during trading hours, halting program transactions temporarily as institutional investors accelerated their selling activity. The previous trading session had witnessed the KOSPI decline 1.55%, ending a six-session winning run after institutions recorded net sales approaching 785 billion won in Korean stocks.
The downturn mirrored significant overnight declines in U.S. memory chip stocks, as market participants reduced exposure to technology holdings broadly. Competitor SK Hynix similarly faced intense institutional selling pressure throughout the session.
The catalyst emerged from escalating tensions between the United States and Iran. An ongoing confrontation in the Strait of Hormuz drove crude oil prices upward, reviving concerns about inflation and pushing U.S. Treasury yields higher. This dynamic typically pressures technology stocks trading at elevated multiples.
Compounding the pressure, media reports suggested the United States had requested South Korea prioritize memory chip production facilities in America as a core component of a proposed $350 billion investment initiative. While Seoul disputed these specific details, the news generated additional uncertainty for Korean semiconductor manufacturers.
Contract Manufacturing Price Increases Indicate Industry Shift
In separate developments, Reuters disclosed that Samsung has implemented price increases of up to 15% for certain advanced contract manufacturing services on newly placed orders, according to two individuals with knowledge of the situation.
Pricing for semiconductors manufactured on its 4-nanometre SF4 technology increased 10% to 15% for clients in China and the United States, while Taiwan-based customers experienced increases ranging from 5% to 10%. Wafers produced using its 5-nanometre SF5 process also climbed 10% to 15%, and its legacy 8-nanometre technology saw price adjustments approaching 10%.
Chinese customers have demonstrated particular willingness to accept the higher pricing structure. U.S. restrictions on sophisticated chipmaking equipment exports have compelled Chinese companies to depend more extensively on international foundries like Samsung.
Samsung generated only 7% of worldwide foundry revenue during Q1 2026, contrasted with TSMC’s dominant share exceeding 70%. However, with TSMC’s cutting-edge production capacity heavily allocated to AI chip requirements, Samsung has acquired pricing leverage it has historically lacked in this business segment.
“As TSMC faces tight capacity and raises prices, customers are shifting to rivals such as Samsung and Intel, prompting Samsung to raise its prices as well,” said Lee Min-hee, analyst at BNK Investment & Securities.
Contract Manufacturing Division Approaches Profitability
Samsung’s foundry operation has recorded losses continuously since 2022. However, analyst Lee indicated that if pricing remains stable, the division could achieve profitability as soon as next year, earlier than previous forecasts.
Samsung’s SF4 production facility at its Pyeongtaek manufacturing complex has operated at maximum capacity since late last year. The facility serves clients including Qualcomm and manufactures base dies for Samsung’s proprietary HBM memory chips.
Last July, Samsung revealed a chip manufacturing agreement with Broadcom. Nvidia CEO Jensen Huang announced in March that Samsung would produce its next-generation AI inference processor. Tesla and Apple also disclosed chip production partnerships with Samsung during the previous year.
Google is presently negotiating with Samsung to manufacture semiconductors utilizing the SF4 process, according to one source knowledgeable about the pricing modifications.
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