Why chipmakers rallied even after Lutnick’s tariff warning — buybacks vs. foreign selling
🎧 Post Summary
Despite the US Commerce Secretary’s warning of targeted semiconductor tariffs, Samsung Electronics and SK hynix surged, pushing the KOSPI back above 7,000 for the first time in over a month. Behind the rally: renewed memory-demand optimism following OpenAI’s new AI model launch, and a combined 55 trillion won buyback program the two chipmakers are running. But a KRX semiconductor index rebalancing on September 10 could trigger large-cap selling, and the buybacks themselves are set to wind down in early-to-mid October, raising concerns about a supply-demand vacuum ahead.
On September 5, this outlet covered US Commerce Secretary Howard Lutnick’s warning of targeted semiconductor tariffs, examining how a double squeeze of tariffs and interest rates might hit Korea’s chip giants. Three days later, the market moved in the opposite direction. Samsung Electronics and SK hynix rallied instead, and the KOSPI climbed back above 7,000. Did the tariff risk fade, or was something else driving the move?
① How the market moved after Lutnick’s warning
The KOSPI, which closed at 6,687.21 on Friday, September 4, jumped 308.18 points (4.61%) to close at 6,995.39 on Monday, September 7. Samsung Electronics rose 5.67% to 270,000 won, while SK hynix climbed 8.25% to 1,783,000 won. The next day, September 8, the index briefly touched 7,170 intraday in an attempt to hold above 7,000, but external uncertainty and rising oil prices dragged it back down to close around 6,950. Less than a week after Lutnick’s tariff warning (September 2), the market chose to buy chip large-caps rather than sell them.
② Behind the rally — OpenAI’s AI boom and HBM4 optimism
The immediate trigger for this rally wasn’t the tariff issue — it was OpenAI. When OpenAI unveiled its new AI model “Astra,” classified at a “Critical” safety risk level, and declared the arrival of the AGI era, expectations grew that memory demand for high-capacity AI servers would climb even further. Even with Wall Street closed for Labor Day, this tailwind carried over into Korean markets and fueled buying in chip large-caps. News of expanded HBM4 supply and solid second-quarter earnings from both companies added further momentum. On this particular day, memory supercycle expectations tied to AI infrastructure expansion outweighed tariff-related risk.
③ Buybacks vs. foreign selling — who’s winning?
Another pillar propping up the index is share buybacks. Samsung Electronics is buying back roughly 15 trillion won (53.29 million shares) on the open market from August 24 to November 21 to fund employee stock compensation, while SK hynix is buying back about 40 trillion won (24.07 million shares, about 3.3% of shares outstanding, all to be retired) from August 20 to November 19. Combined, that’s about 55 trillion won.
As of September 2, execution stood at 29.65% for Samsung Electronics (15.8 million shares) and 27% for SK hynix (6.5 million shares). Notably, over the five trading days of August 24–28, the two companies’ combined buyback purchases totaled about 8.05 trillion won — nearly matching foreign investors’ net KOSPI selling over the same period (about 8.32 trillion won). In effect, companies absorbed almost exactly what foreigners sold. Over the full month of August, foreigners net-sold about 7.06 trillion won of SK hynix and roughly 2.3 trillion won combined of Samsung Electronics and its preferred shares, while retail investors did the opposite — net-buying 2.64 trillion won of SK hynix and 2.29 trillion won of Samsung Electronics, betting on the buyback-driven safety net.
④ The September 10 rebalancing factor — from large caps to equipment makers
In the short term, September 10 is the date to watch. It’s when stock index and single-stock futures/options expiration coincides with the Korea Exchange’s (KRX) regular sector-index rebalancing. Passive funds tracking the KRX Semiconductor Index alone are estimated to generate roughly 1.13 trillion won in sell orders for SK hynix and about 190 billion won for Samsung Electronics — a combined 1.32 trillion won in physical selling. Much of that money is expected to flow into semiconductor materials, parts, and equipment (SME) stocks. As some of the large-cap-driven gains get partially unwound through rebalancing, equipment makers could actually see a short-term supply-demand boost.
⑤ Remaining risks — buyback deadline and the September FOMC
Two ticking clocks remain. One is the buyback deadline. At the current pace, Samsung Electronics is expected to finish around early October and SK hynix around mid-October — and if foreign selling continues after that, the “seawall” that has propped up the index disappears, potentially widening the supply-demand gap. The other is the US Federal Open Market Committee (FOMC) meeting scheduled for September 15–16. As of September 2, CME FedWatch odds of a rate hike stood as high as 68%, and depending on the outcome, volatility across Korea’s large-cap stocks, semiconductors included, could increase. Lutnick’s proposed semiconductor tariffs also remain an unresolved variable — specifics like the tariff rate, scope of application, and country-of-origin criteria have yet to be officially announced.
📌 Things to keep in mind
- Buybacks can defend a stock’s floor, but that’s different from the momentum that drives an actual uptrend.
- Key details of the proposed semiconductor tariffs — rate, scope, country-of-origin criteria — haven’t been officially finalized. It’s safer to wait for a confirmed announcement than to overreact to isolated remarks.
- The September 10 rebalancing affects overall index-level supply and demand more than individual stocks, so a diversified approach is preferable to concentrating on large-caps.
- Be prepared for heightened volatility around the period where the September FOMC outcome and the buyback deadline (early-to-mid October) overlap.
Ultimately, this rally reflects not the disappearance of tariff risk, but two shields — AI-driven demand optimism and share buybacks — temporarily masking that risk. Once those shields come down after October, and once Lutnick’s tariff proposal is finalized into concrete figures, how the market reacts next will be the key thing to watch.
References
- Hankyung (hankyung.com) — Reporting on semiconductor index rebalancing and fund flows into equipment makers
- Herald Corp (biz.heraldcorp.com) — Reporting on buyback execution rates and October supply-demand vacuum concerns
- EBN News Center (ebn.co.kr) — Analysis of August foreign/retail flows and September variables
- Maeil Ilbo (m-i.kr) — Market wrap on September 7 KOSPI and chip large-cap close
- Erountv (erountv.com) — Reporting on buyback execution rate as of September 3
- Newsway (newsway.co.kr) — Analysis of corporate-entity net buying and buyback-driven market support
- SPTA Times Korea (sptatimeskorea.com) — Original report on Commerce Secretary Lutnick’s semiconductor tariff warning