KOSPI has burst into a bull market: the chip rally is gaining momentum.
The South Korean KOSPI index has confidently entered a bull market phase, posting a gain of more than 20% from July lows. The main driver of this upward movement has been the powerful recovery in memory and semiconductor stocks, which has set the tone for the entire regional market.
Sandisk sets the trend
The key catalyst was Sandisk. On Thursday, its shares surged 13.7% following the release of an ambitious long-term forecast that clearly exceeded market expectations. Investors enthusiastically embraced the company's strategy, which envisions mid- to high-double-digit revenue growth through 2030 while maintaining an adjusted gross margin of around 80%. Chief Financial Officer Luis Visoso also announced a capital return program for shareholders, promising to direct all excess cash flow after investments toward share buybacks and dividends.
Optimism quickly spread across the entire sector. Micron shares jumped 4.2%, SK Hynix gained 7.3%, and hard drive manufacturers Seagate and Western Digital rose 4.9% and 7.3%, respectively. Analysts, particularly from Evercore ISI, highlight Sandisk's impressive portfolio of long-term contracts totaling $93.9 billion, including agreements with three major U.S. data center operators, which formed the basis for a "buy" recommendation.
Asian market picks up the baton
The rally continued in Asian trading on Friday. Japan's Nikkei 225 rose 1.73%, the Topix gained 0.92%, and the KOSPI climbed 2.11%, breaking through the psychologically important 7000-point level for the first time in 15 trading sessions. The small-cap KOSDAQ index also showed positive momentum, rising 0.84%.
Bull market sustainability in question
However, not all market participants share the widespread optimism. Some experts, including Jeong In-yun from Fibonacci Asset Management Global, urge caution, not viewing the current rise as a full-fledged signal of a long-term trend reversal. Peter Kim from KB Securities attributes the previous decline more to technical factors and capital flows rather than a fundamental deterioration in semiconductor manufacturers' performance.
The index has risen more than 10% over five trading days ahead of the long weekend in South Korea, and foreign capital inflows could hold the 7000 level. Further momentum will depend on how long the optimism sparked by Sandisk's forecasts can sustain the rest of the memory sector companies.
My view: The current rally looks convincing, but I would not rush to call it the start of a new sustainable bull cycle. Fundamental drivers such as demand for AI solutions and the recovery in memory prices are strong, yet the market has already priced in a significant portion of the positive news. The key risk remains a possible correction after such rapid growth, especially if macroeconomic data or earnings from other sector giants fail to confirm expectations.