Key Takeaways
- Samsung Electronics ((/stock/005930)) and SK Hynix ((/stock/000660)) shares surged, adding a combined $37 billion to their market capitalization, following a strategic deal with OpenAI for its ambitious Stargate AI data center project.
- SK Hynix ((/stock/000660)) stock soared 12% to an all-time high, while Samsung Electronics ((/stock/005930)) jumped 4.7% to a four-year peak, driven by anticipated exponential demand for high-bandwidth memory (HBM) chips.
- Japan's 10-year government bond auction witnessed a fall in investor demand, influenced by heightened political uncertainty ahead of the ruling party's leadership election and growing risks of a Bank of Japan (BOJ) rate hike.
- The OpenAI Stargate project, a $500 billion initiative, is projected to require up to 900,000 wafers per month as it expands, a figure more than double the current global HBM capacity, underscoring South Korea's pivotal role in the global AI ecosystem.
South Korean chipmakers Samsung Electronics ((/stock/005930)) and SK Hynix ((/stock/000660)) experienced a significant rally in their shares on Thursday, propelled by a preliminary agreement with OpenAI to supply chips for its expansive Stargate artificial intelligence data center project. The partnership, announced late on Wednesday, sent Samsung shares to their highest in over four years and SK Hynix to an all-time high, collectively adding $37 billion to their market capitalization. This surge also helped push the benchmark KOSPI index more than 3% to a record high.
SK Hynix ((/stock/000660)), a leader in high-bandwidth memory (HBM), saw its stock soar 12%, while rival Samsung Electronics ((/stock/005930)) rose as much as 4.7%. OpenAI CEO Sam Altman signed a letter of intent to enlist the two firms in his data center construction effort, a global undertaking that involves major players like Nvidia Corp. (NVDA) and Oracle Corp. (ORCL). The Stargate project, a $500 billion private-sector initiative, aims to build AI infrastructure in the U.S. and will also see OpenAI collaborate with the South Korean chipmakers to build two data centers in South Korea.
Analysts suggest that the strategic partnership will alleviate concerns about potential HBM chip price declines next year due to intensifying competition, predicting a substantial increase in demand from the Stargate project. The projected demand for up to 900,000 wafers per month as Stargate expands is more than double the current global HBM capacity, highlighting the project's immense scale and its role in accelerating global AI development. Beyond the core chipmakers, Samsung Electronics' affiliates such as Samsung SDI ((/stock/006400)), Samsung C&T ((/stock/028260)), and Samsung SDS ((/stock/018260)) also saw sharp increases in their shares due to related partnerships with the U.S. firm.
Meanwhile, Japan's 10-year government bond auction experienced a fall in investor demand, reflecting a cautious market sentiment. This decline was primarily driven by escalating political uncertainty ahead of the ruling Liberal Democratic Party's leadership election scheduled for October 4, coupled with growing expectations of a Bank of Japan (BOJ) rate hike. Recent demand for government bond auctions has been described as lukewarm, with the previous 10-year auction's demand falling below the 12-month average.
Concerns over the BOJ's monetary policy trajectory are intensifying, with some policymakers backing further rate hikes if growth and inflation forecasts hold. BOJ Deputy Governor Ryozo Himino has suggested the central bank should continue its path of raising interest rates, even while acknowledging global economic uncertainties. Traders are currently pricing in a 46% chance of a quarter-point rate increase by the end of October. The yield on Japan's 10-year government bonds has been hovering near levels not seen since 2008, reflecting the market's anticipation of tighter monetary conditions.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.