Samsung's 6.9% Drop: Morgan Stanley's 'Chip Reaper' Strikes Again as Internal Tensions Mount

Morgan Stanley's bearish call triggers sharp selloff in Samsung shares, with record quarterly profit overshadowed by revenue miss and internal bonus dispute.

Samsung Electronics suffered its sharpest single-day decline in months on Tuesday, with shares tumbling 6.92% to 296,000 Korean won. The selloff came despite the company unveiling a record-breaking quarterly profit that was nearly 19 times higher than a year earlier. Behind the contradiction lies a potent mix: a bearish analyst call from a bank with a notorious track record in semis, a revenue miss, and an escalating internal bonus dispute that threatens to spill into public protests.

Morgan Stanley triggered the rout. The investment bank issued a report urging clients to reduce exposure to memory-chip stocks, arguing that the peak of the profit cycle has already passed. Analysts at the firm see capital rotating toward large-cap tech names instead. The recommendation carries particular weight in Seoul, where Morgan Stanley earned the nickname "Chip Reaper" after its prescient 2021 warning of oversupply that preceded a sharp correction. Now, the bank expects a similar downturn in memory pricing, although it maintains that the broader AI rally remains intact.

The warning collided with Samsung's preliminary second-quarter numbers, released earlier that day. The company guided for an operating profit of approximately 89.4 trillion won for the three months through June, a staggering 1,810% jump from the 4.68 trillion won recorded a year earlier. The semiconductor division alone contributed around 94% of that total, fueled by the unrelenting demand for AI memory chips. Revenue climbed 129% to roughly 171 trillion won, but that fell short of the 172.18 trillion won consensus estimate. The small miss was enough to spook a market that had already priced in a 130.83% rally year-to-date, prompting a wave of profit-taking that turned into a 6.9% rout.

The stock now sits 20.96% below its 52-week high of 374,500 won, hit on June 19. The 50-day moving average of 299,900 won is just 1.30% above the current price. The relative strength index of 45.4 points to a neutral-to-slightly-weak technical posture, with no clear oversold or overbought signals.

Internal strife adds further weight. Samsung's Device eXperience (DX) division, responsible for smartphones, TVs and home appliances, is up in arms over a glaring pay disparity. Workers in the booming chip business have negotiated bonuses of up to 600 million won per head, while DX employees are set to receive only about 6 million won — and in shares rather than cash. The union has called a large rally for July 16 at the company's Suwon headquarters, with organizers expecting between 2,000 and 3,000 participants. The dispute compounds investor anxiety over potential disruptions to production.

Adding to the pressure, Samsung is building massive new fabrication plants in the south of the country, far from its traditional manufacturing base. Analysts view this as an unusual and costly move, requiring entirely new infrastructure. Meanwhile, Chinese rival ChangXin Memory Technologies is closing the technology gap, and other Asian competitors are expanding capacity, raising the risk of oversupply and eroding pricing power.

On the technology front, there is a positive: Samsung recently passed Nvidia's qualification tests for its 12-layer HBM3E memory chips, reclaiming lost ground in the high-bandwidth memory race. Market observers are now watching two key dates: the July 16 protest and the release of the detailed quarterly earnings report later in the month. Both events will test whether the record chip profits can paper over the fractures emerging across the rest of the company.