Stronger won to test chip, display firms' Q3 profitability

The Korean won's rapid appreciation, moving from 1,480 to 1,382 per dollar in two months, directly impacts major exporters. Samsung Electronics' third-quarter operating profit forecast dropped 9 percent, while SK hynix's fell 6.7 percent. This currency shift reduces the won value of dollar-denominated sales, squeezing margins for companies with significant won-based operational costs. The effect is immediate and quantifiable for these firms.

This currency pressure particularly hurts companies like SK hynix, which reported a 10 percent won-dollar decline could cut its pre-tax profit by 4.75 trillion won. Samsung Electronics is less exposed due to its domestic consumer electronics and mobile businesses. LG Display, with 94.7 percent overseas revenue, expects a 40 percent operating profit decline. This demonstrates the vulnerability of highly export-dependent sectors to exchange rate volatility.

The key watch is how long the won sustains its strength. Brokerages adjusted forecasts based on a 1,350 won per dollar assumption. If the won continues to appreciate beyond this, further earnings downgrades are likely. This could also affect capital expenditure plans for AI memory chips, as noted by Daishin Securities analyst Ryu Hyung-keun, amid broader macroeconomic uncertainty.