Second Half of 2026 Semiconductor Sector Outlook — From HBM4 Mass Production to Legacy Inventory Adjustment, Investment Strategy Review

Summary of the First Half 2026 Korean Semiconductor Market Trends

The semiconductor market in the first half of 2026 was exceptionally vibrant. Samsung Electronics (삼성전자) and SK Hynix (SK하이닉스), the pillars of Korea's semiconductor industry, both maintained strong leadership in the global memory market. The High Bandwidth Memory (HBM) segment, in particular, experienced better-than-expected growth. This was driven by explosive increases in AI demand, prompting substantial growth in server memory and high-performance computing semiconductors. Meanwhile, memory prices for both DRAM and NAND remained stable throughout the first half, showing mild upward trends following a period of price softness.

Samsung Electronics reported semiconductor operating profit of KRW 5.37 trillion in Q1, maintaining robust year-on-year performance, while SK Hynix’s expanded HBM sales significantly contributed to improved earnings. The global memory market approached $140 billion in size, showing over 8% growth compared to the same period last year. Investment in AI servers continued to be strong, especially among major tech companies.

The key themes dominating H1 2026 are clearly “High-Performance Memory (HBM)”, “AI Server Investment”, and “Stable Memory Pricing.” However, behind this prosperous outlook lie complex variables, making predictions for the second half challenging.

In-Depth Analysis of Key Variables in the Semiconductor Sector for H2 2026

HBM4 Mass Production Timeline and Market Impact

The HBM market has steadily evolved over recent years, becoming an essential component for high-performance computing. While HBM3-based products dominated the first half of 2026, Samsung Electronics and SK Hynix are both accelerating mass production of HBM4 in the latter half. Samsung officially announced founding HBM4 foundry production within Q3 2026, and SK Hynix is expected to establish mass production capacity by Q4.

Frankly, the speed of HBM4 market entry is faster than anticipated. This is due to explosive demand for ultra-high-speed memory in data-intensive applications such as AI, autonomous driving, and the metaverse. However, production cost and yield stabilization remain challenges, meaning early-stage profitability may be limited.

Table 1 summarizes the key specifications and expected launch timelines for each HBM product generation.

China’s Semiconductor Self-Reliance and Global Supply Chain Reconfiguration

Another critical factor to watch in the second half is China’s push for semiconductor self-reliance. Amid escalating U.S.-China tech competition and sanctions, the Chinese government has focused on boosting its domestic semiconductor industry through large-scale investments and supportive policies. However, realistically, high-performance memory production, especially HBM4-class products, faces substantial technical hurdles in China. Thus, near-term global market impact remains limited.

An overlooked aspect is the growth speed of China’s materials, components, and equipment (MCE) industry. While Korean MCE companies face challenges entering the Chinese market, China is progressively achieving self-sufficiency in domestic equipment and materials. This suggests a more complex competitive landscape in the mid-to-long term.

AI Server Investment Cycle and Semiconductor Demand

AI server expansion driven mainly by big tech firms is a core demand driver for semiconductors. Global AI server investment reached nearly $75 billion by H1 2026, marking a 12% increase from the previous year. Investments focus primarily on CPUs, GPUs, and memory products including HBM and DDR5, presenting both opportunities and challenges for semiconductor suppliers.

Notably, the AI server investment cycle exhibits higher volatility compared to traditional data center investments due to rapid technological advances and intensified competition. Consequently, investment pace may moderate from early next year, introducing greater short-term demand fluctuations in semiconductors.

Legacy Memory Inventory Adjustment and Price Stability

The DRAM and NAND markets began inventory adjustments in late 2025 and maintained relatively stable supply-demand balance through the first half of 2026. DRAM prices experienced moderate quarterly increases of approximately 3–5%, while NAND showed a slower recovery trend.

Importantly, unlike previous memory cycles, the post-inventory adjustment price increases may be limited this time. This is due to demand differentiation between AI high-performance memory and legacy products. Declining demand for legacy PC and mobile NAND contrasts with concentrated demand for AI and server memory, deepening market polarization.

Competitive Positioning Comparison of Key Domestic Companies

Analyzing the positioning of core players such as Samsung Electronics, SK Hynix, and related MCE companies in Korea reveals distinct focus areas and strategies.

Samsung Electronics is successfully diversifying its portfolio by simultaneously advancing foundry and HBM4 production. In contrast, SK Hynix is concentrating on an HBM-centric strategy to secure leadership in the AI server memory market. MCE companies are strengthening their technological competitiveness while responding to global supply chain diversification.

Current Stock Price Levels from a Valuation Perspective

The semiconductor companies entered a phase of increased volatility after H1 2026. Both Samsung Electronics and SK Hynix show clear earnings improvements, but the market simultaneously prices in concerns over overvaluation and geopolitical risks.

Samsung’s strong Q1 performance is priced with a PER of around 10–12x, which feels slightly high compared to traditional valuation standards. SK Hynix enjoys a relatively higher premium with a PER near 15x, driven by growth expectations centered on HBM.

However, it is important to note that assessing valuations solely on absolute ‘cheapness’ or ‘expensiveness’ is difficult. The semiconductor industry’s profitability is highly sensitive to technology cycles and supply-demand imbalances. Investors should adopt a valuation framework that balances mid-to-long-term growth potential with short-term volatility risks.

Investment Strategy Proposals for the Second Half of 2026

Frankly, investing in semiconductors is never an easy decision, especially during a period marked by multiple uncertainties as in H2 2026. Therefore, adopting flexible response strategies tailored to various scenarios is advisable.

Scenario 1: Successful Mass Production of HBM4 and Continued Expansion of AI Server Investment

Under this scenario, demand for HBM-centered memory and high-performance semiconductors will expand, strengthening the earnings momentum of Samsung Electronics and SK Hynix. This outlook presents significant upside potential for stock prices, recommending an increased allocation in core memory suppliers over the medium to long term. However, diversification and proper rebalancing are necessary considering initial yield stabilization challenges and China-related risks.

Scenario 2: Accelerated Chinese Self-Reliance and Heightened Global Supply Chain Instability

If China’s semiconductor self-sufficiency advances faster than expected, or if U.S.-China sanctions intensify causing supply chain disruptions, domestic companies may face export and sales channel pressures. In this case, MCE companies could adopt defensive positions leveraging their technological edge and domestic market advantages, so maintaining a defensive weight in the MCE sector would be prudent.

Scenario 3: AI Server Investment Cycle Adjustment and Legacy Inventory Build-up

Should AI server investments slow down more than expected, accompanied by renewed legacy memory inventory accumulation, downward pressure on DRAM and NAND prices could persist. Large memory-focused stocks might face short-term price corrections, warranting cautious buying and thorough fundamental analysis. Increasing cash allocation within portfolios to mitigate volatility is also worth considering.

Conclusion

The Korean semiconductor industry in H2 2026 is entering a dynamic phase featuring intertwined factors such as HBM4 rollout, AI server investments, Chinese self-reliance, and legacy inventory adjustments. Looking beyond short-term fluctuations, investors must carefully analyze the influence of each variable and devise scenario-based strategies.

In my personal view, technological innovation and expanding AI demand remain clear structural growth drivers, with domestic players well-positioned to capitalize on these trends. Nonetheless, global geopolitical and market volatility pose ongoing risks, so a balanced perspective and flexible investment approach are critical rather than excessive optimism.