Broadcom's Earnings Could Save Samsung and SK Hynix From Foreign Selling

The Foreign Exit Is Real

August was brutal for Korea’s semiconductor crown jewels. Samsung Electronics closed down 4.02% at 255,050 won. SK Hynix fell 4.73% to 1,613,000 won. Foreign investors dumped roughly 6.4 trillion won worth of SK Hynix shares and another 820 billion won in Samsung stock over the month alone. The KOSPI dropped nearly 4% on a single day as US-Iran tensions pushed oil prices higher and the 10-year Treasury yield broke to fresh highs.

The domestic buying club—other financial institutions scooping up 1.65 trillion won in treasury stock buybacks—could not offset the outflow. This is not a routine correction. It is a structural rotation out of Korean memory chips, and the question on everyone’s mind is whether anything can stop it.

What makes this episode distinct from previous foreign sell-offs in Korean equities is the velocity and the unanimity. In past cycles, foreign investors typically rotated within sectors—selling overvalued names while maintaining exposure to the broader market. This time, they are exiting two of the three largest companies on the KOSPI almost in lockstep. That signals a thematic rejection, not a stock-specific rebalancing.

The timing is no accident. Foreign outflows from Korean equities as a whole accelerated through August, driven by a combination of a stronger dollar, rising US yields, and risk aversion around the Israel-Iran conflict that erupted in mid-June and continued to simmer. But semiconductor exposure amplified the pressure. Memory chips, once the most reliable hold in Korean portfolios, became the most liquid exit. Institutional investors needed to raise cash quickly, and Samsung and SK Hynix—each with enormous daily trading volumes—were the easiest positions to unwind without catastrophic slippage.

Why Broadcom Is the Pivot

Broadcom reports third-quarter results for fiscal year 2026 this morning, and Korean markets are treating it as a referendum on the AI infrastructure cycle itself. The connection is indirect but critical: Broadcom supplies custom AI accelerators (ASICs) and datacenter networking silicon to Google and other hyperscalers. When Broadcom scales ASIC production, it pulls in more high-bandwidth memory and advanced packaging volume. Samsung and SK Hynix are the primary suppliers of that HBM.

So Broadcom’s earnings are not just a quarterly readout. They are a leading indicator of whether Big Tech’s AI capex is still accelerating—or quietly decelerating. If Broadcom guides AI revenue above expectations, the thesis that Korean memory demand remains intact gets a lifeline. If it disappoints, the foreign selling gets validated.

The chain of dependence runs deeper than most investors appreciate. Google’s custom AI silicon, known as Tensor Processing Units and their newer generations, is designed and specified by Google but manufactured under contract by Broadcom in collaboration with TSMC. Every unit that ships requires HBM stacks sourced largely from SK Hynix, with Samsung supplying a growing share. Nvidia dominates theGPU narrative, but the ASIC pathway is where a significant and growing portion of hyperscaler spending is being allocated. When Broadcom talks about demand, it is indirectly talking about SK Hynix and Samsung’s order books three to six months out.

This is why the call matters disproportionately to a company that has no direct business listing on the KOSPI. Korean portfolio managers and strategist desks in Seoul have long monitored Broadcom’s quarterly commentary as a proxy signal. It is one of the few high-frequency data points that can confirm or deny whether the AI infrastructure buildout is real or speculative.

The Number That Will Move Markets

Wall Street consensus, led by JP Morgan, has Broadcom’s AI revenue at roughly $56 billion for FY2026 and projecting a jump to $130 billion in FY2027. That is already a steep climb. The market will be watching two things specifically: whether management raises the FY2026 AI revenue target, and whether it provides evidence of supply-chain capacity to support whatever comes next.

Park Jae-hwan at Eugène Investment & Securities flagged both as the decisive factors. Supply-side constraints—HBM yield rates, TSMC packaging throughput, the physical limits of co-packaged optics—will determine whether demand guidance translates into actual revenue. A raised guide without supply visibility is just noise.

The $56 billion figure itself deserves scrutiny. It implies Broadcom’s AI business roughly doubled year over year, which is extraordinary even by semiconductor standards. The question is whether the run rate is linear or lumpy. If the quarter came in hot because of a few large Google orders that front-load into Q3, the forward trajectory may not sustain that pace. If the revenue reflects broad-based demand across multiple hyperscaler clients, the signal is stronger.

Investors will also be listening for commentary on ASP trends in the AI silicon business. Rising average selling prices would indicate that demand is outpacing supply and that Broadcom has pricing power—a positive downstream signal for memory vendors who benefit from healthy margin environments. Flat or declining ASPs, especially in a growing revenue environment, would suggest competition is intensifying and that the custom-chip market may be approaching an inflection point.

What the ‘Nicknames’ Reveal

Korean financial media has long wrapped Samsung and SK Hynix in a shared identity. The headline framing here—referencing a colloquial shorthand for the duopoly—tells you something most English-language analysts miss. These are not just two companies in the same sector. They are competitors fighting for the same sliver of AI memory demand while simultaneously depending on the same macro narrative to justify their valuations.

When foreign investors sell SK Hynix and Samsung together, they are not making a company-specific bet. They are betting against the entire Korean memory-chip thesis: that HBM demand will sustain multi-year growth, that China export restrictions won’t bite harder, and that the AI capex cycle hasn’t peaked. Broadcom’s guidance either reinforces or fractures that bet.

The duopoly dynamic adds a complication that independent analysis sometimes overlooks. Samsung and SK Hynix are locked in a fierce race to dominate HBM production. SK Hynix currently holds the leadership position with its HBM3E and HBM3ULP products, supplying the majority of Nvidia’s high-end GPU orders and a growing share of the ASIC market. Samsung has been playing catch-up, with its HBM3E qualification process slower than hoped. But Samsung’s advantage lies in its integrated business model—it can bundle memory, foundry, and system solutions in ways SK Hynix cannot. For hyperscalers evaluating custom silicon supply chains, Samsung’s vertical integration is increasingly attractive.

This means that even if Broadcom’s earnings validate strong ASIC demand, the distribution of that demand between Samsung and SK Hynix is not guaranteed. SK Hynix may capture the lion’s share if its yield and qualification lead persists. Samsung may gain ground if hyperscalers diversify to reduce single-source risk. The earnings call may not answer this question directly, but any indication of supply-chain tightness will intensify the competition between the two Korean giants for whoever secures allocation.

Second-Order Effects

The implications of Broadcom’s results extend well beyond Korean semiconductor stocks. A strong readout would likely reinforce the narrative that AI infrastructure spending is far from peaked, which could reignite buying interest in US-listed AI pure plays and further lift Nvidia, AMD, and the magnate cohort. That, in turn, could create a wealth effect that flows back into Korean equities through cross-asset allocation decisions.

Conversely, a weak result would send a corrective shock through the entire AI trade. ETFs and index funds with heavy AI weighting would face redemptions. Active managers would be forced to re-evaluate position sizes. Korean semiconductors, already under pressure, would likely bear disproportionate blame even though their fundamentals are separated from Broadcom’s by several layers of the supply chain.

There is also a currency dimension. Foreign selling of Korean equities weakens the won, which historically has a complicated relationship with Samsung and SK Hynix shares. A weaker won should theoretically boost the won-denominated earnings of export-oriented chipmakers, but in practice, the sentiment effect tends to dominate. Depreciation fuels further outflows as foreign investors seek to minimize currency losses, creating a feedback loop that is difficult to break without a credible catalyst.

What Comes Next

The broader lesson for investors watching from outside Korea is that the AI infrastructure story is fragmenting. Nvidia gets the headlines, but Broadcom’s ASIC business is where Google, Amazon, and Microsoft are betting their custom-chip ambitions. The supply chain that feeds Broadcom’s designs—HBM from SK Hynix and Samsung, packaging from TSMC and Samsung Foundry—is the same chain that determines whether Korea’s semiconductor sector stabilizes or continues its August bleed.

Earnings season is winding down. Broadcom’s call is one of the last major signals before markets digest full-quarter results from the hyperscalers themselves. For Korean semiconductors, it is less about a single stock and more about whether the AI infrastructure cycle still has room to run—or whether the capitulation in August was just the beginning.

The two paths are stark. A bullish Broadcom reading gives Korean semiconductors a respite and potentially reverses the foreign outflow. A disappointing one accelerates the rotation away from Korean memory stocks and forces a fundamental re-evaluation of how much of the AI growth story is already priced into valuations that assume unending hyperscaler spending. Either way, the next few hours of earnings commentary will carry outsized weight for markets that have spent the past year assuming the AI buildout was irreversible.

For now, the burden of proof rests with Broadcom. The Korean market is waiting to see whether conviction in the AI infrastructure cycle survives contact with quarterly results.