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Investing.com-- Shares of South Korean chipmakers Samsung Electronics and SK Hynix rose sharply on Monday after local media reported the two saw a sharp reduction in their chip inventories, signaling strong demand and potentially higher prices.
Samsung was buoyed by the chipmaker vowing to build more chipmaking facilities in South Korea, as part of a 450 trillion won ($310.8 billion) local investment over the next five years.
The company also finalized a plan to invest more in the U.S., as part of a broader trade deal between Seoul and Washington.
Samsung Electronics Co Ltd (KS:005930) shares rose 3.2%, while SK Hynix Inc (KS:000660) rallied 6.8%. The two were the biggest boosts to the KOSPI index, which surged 1.6%.
South Korean news outlet The Chosun Daily reported that Samsung and SK Hynix saw a major reduction in their chip inventories by the end of the third quarter, signaling strong demand from the artificial intelligence industry.
SK Hynix in particular is a major supplier of AI chips, especially to stalwart NVIDIA Corporation (NASDAQ:NVDA), while Samsung also signed several key memory chip deals this year.
Low inventory levels represented a major shift for the two, who only three years ago were grappling with surging inventories due to weak global chip demand.
Low inventories also signal that memory chip prices will increase further in the near-term, which in turn bodes well for the two chipmakers. Memory chip prices were seen rising sharply this year on more AI-fueled demand.