Q3 Earnings Season Begins: Will Semiconductor Giants Drive the KOSPI Rally Again?

 South Korea’s stock market is entering one of its most decisive periods of the year. As LG Electronics kicks off the third-quarter earnings season, all eyes are turning to whether the KOSPI can regain upward momentum after recent volatility. Analysts across the securities industry are pointing to one key catalyst: semiconductor earnings. If chipmakers like Samsung Electronics and SK Hynix deliver strong results, they could set the tone for another market rebound.

KOSPI Companies’ Q3 Operating Profit Estimate Reaches ₩77.5 Trillion

According to NH Investment & Securities, as of October 12, the combined operating profit estimate for KOSPI-listed companies in the third quarter stands at approximately ₩77.5 trillion (about $57 billion) — an 8% upward revision over the past 20 trading days.

This marks a notable improvement in market sentiment, especially after the index briefly retreated below the 3,500-point level earlier in the week. The KOSPI had previously surged past the historic 3,600-point mark for the first time on October 10, buoyed by optimism over corporate earnings. However, renewed U.S.–China trade tensions over the weekend fueled global uncertainty, leading to a mild correction at the start of the new week.

Semiconductor Earnings at the Center of Attention

The spotlight, unsurprisingly, is on semiconductors — the sector that has long been the backbone of Korea’s export-driven economy and stock market performance.
Market consensus suggests that both Samsung Electronics and SK Hynix could report quarterly operating profits exceeding ₩10 trillion each, signaling a significant turnaround after a sluggish period for the industry.

Financial data platform FnGuide projects Samsung Electronics’ third-quarter operating profit at ₩10.14 trillion, up 10.45% year-over-year. Meanwhile, SK Hynix’s estimate stands at ₩10.91 trillion, representing a staggering 55.25% increase from the same period last year.

These impressive forecasts have lifted the overall earnings outlook for the KOSPI and reignited investor optimism that had been dampened by global macroeconomic uncertainties.

Industries With Upward Revisions: Chips, Displays, and Machinery

According to Kyobo Securities, the sectors that have seen the largest upward revisions to their earnings consensus are semiconductors, display panels, shipbuilding, machinery, trading and capital goods, and securities.

In contrast, industries tied to electric vehicle batteries — such as chemicals and IT appliances — along with automotive, energy, steel, transportation, cosmetics, apparel, media, IT hardware, and telecommunications, have experienced downward revisions over the same period.

This divergence underscores a growing belief among investors that Korea’s next growth engine may once again lie in the tech manufacturing sector, particularly semiconductors, rather than the consumer-oriented or cyclical industries.

Samsung Electronics: High Expectations and “Earnings Shock” Concerns

While optimism runs high, some analysts caution that expectations for Samsung Electronics’ quarterly performance may have climbed too quickly. The company’s Device Solutions (DS) division, responsible for semiconductors, is expected to benefit from higher memory prices and improved foundry yields, but a minor shortfall versus market forecasts could still trigger short-term volatility.

“The market’s focus has already shifted from Q3 results to the outlook for the 2025 semiconductor cycle,” said Kim Jong-young, a senior analyst at NH Investment & Securities.
“Even if Samsung’s earnings slightly miss expectations, we view it as a buying opportunity rather than a warning signal. Any temporary correction in the stock should be seen as a chance to accumulate.”

This view reflects a broader consensus that, despite possible near-term fluctuations, semiconductor demand is set for a sustained recovery in 2025, driven by the adoption of AI servers, next-generation smartphones, and high-bandwidth memory (HBM) used in artificial intelligence systems.

SK Hynix: Riding the Memory Rebound

SK Hynix, meanwhile, is seen as a prime beneficiary of the memory upcycle. Analysts expect the company to report robust profits from DRAM and NAND flash, supported by rising average selling prices (ASP) and improved inventory levels.

The company’s strategic push into HBM3E memory chips — a key component in AI-focused data centers — has also positioned it as one of the most sought-after plays in the global semiconductor race.

“The anticipated turnaround in the memory market remains intact,” said Han Ji-young, an analyst at Kiwoom Securities. “Investors should focus on the DS division’s improvement, including the potential resolution of foundry losses and the benefits of memory price increases. Given the ongoing recovery trend, a gradual, long-term accumulation approach would be appropriate.”

Broader Implications for the KOSPI

The health of the semiconductor industry often serves as a barometer for Korea’s economy. Chips account for more than 20% of the nation’s total exports, meaning that strong performance from Samsung and SK Hynix can lift not only the KOSPI but also investor confidence across the board.

Historically, periods of robust semiconductor demand have coincided with market rallies and improved corporate sentiment, while downturns have triggered broad-based corrections. As such, this earnings season may prove pivotal in determining whether the KOSPI can sustain its momentum above 3,500 points or face renewed consolidation.

Moreover, the recent decline in global inflation pressures and the Federal Reserve’s cautious stance on rate hikes have provided additional breathing room for emerging markets, including Korea. These macro factors, combined with a domestic earnings rebound, could help stabilize foreign capital inflows into the KOSPI in the coming months.

What Could Derail the Rally?

Despite growing optimism, risks remain. The U.S.–China trade dispute continues to pose a threat to the global supply chain, and any escalation could disrupt semiconductor exports. Additionally, geopolitical tensions in East Asia, fluctuating energy prices, and persistent inflationary pressures could limit the extent of the rally.

On the domestic front, retail investor sentiment remains cautious. Many individuals who entered the market during the pandemic-era boom have since shifted to safer assets such as savings products and short-term bonds. Reigniting that retail enthusiasm will likely require clear evidence of sustained profit growth and policy stability.

Outlook: A Market Poised Between Hope and Uncertainty

As South Korea’s largest companies begin to unveil their third-quarter results, the market narrative is clear: semiconductors hold the key. If Samsung Electronics and SK Hynix deliver as expected — or better — it could solidify the perception that the chip industry has entered a genuine recovery phase.

However, even if short-term earnings fall slightly below consensus, experts suggest maintaining a medium- to long-term perspective. The structural demand for advanced chips, driven by artificial intelligence, cloud computing, and 5G infrastructure, is not going away.

In that sense, a temporary pullback may not be a warning sign — but rather an opportunity for investors with patience and conviction.

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Conclusion

The start of the 2025 third-quarter earnings season has reignited discussions about the future direction of the KOSPI. While global uncertainties persist, the fundamentals of Korea’s semiconductor sector appear stronger than they have been in years.

If this momentum continues, the coming weeks could mark the beginning of a new phase — one defined not by speculation, but by real earnings power and the return of investor confidence to Asia’s fourth-largest economy.