"South Korean semiconductor fabs run 24/7, consuming enormous electricity and process gases, with a significant share of that power coming from LNG-fired plants. When natural gas prices spike, fab operating costs follow. Natural gas futures in the U.S. have risen 7% across the past week, but the surge is much more dramatic in other regions such as Europe. A dramatic surge driven by Iran-related supply disruptions would directly compress margins at Korean fabs if sustained."
"The two most exposed companies are Samsung Electronics and SK Hynix, which together control the majority of global DRAM supply and a massive share of NAND. Both are headquartered and primarily manufactured in South Korea, making their KOSPI declines a direct read-through to US names selling off this morning. SK Hynix fell 11.5% overnight while Samsung fell fell 9.9%."
Memory and storage stocks declined significantly Tuesday due to geopolitical tensions affecting energy costs in South Korea, a major semiconductor manufacturing hub. South Korean fabs operate continuously, consuming substantial electricity and process gases, with significant power sourced from LNG-fired plants. Iran-related supply disruptions threaten to spike natural gas prices, directly compressing operating margins for Korean semiconductor manufacturers. Samsung Electronics and SK Hynix, which control most global DRAM supply and substantial NAND production, experienced overnight declines of 9.9% and 11.5% respectively on the KOSPI index. US-listed memory and storage companies including Micron Technology, Western Digital, and SanDisk declined in sympathy with Korean counterparts, reflecting exposure to Korean fab operations and broader storage sector vulnerability.
#semiconductor-manufacturing #energy-costs-and-lng #geopolitical-risk #memory-and-storage-stocks #south-korea
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