Korean technology companies are benefiting from AI infrastructure expansion, with growth drivers strengthening simultaneously across memory, components, ESS, and power equipment

Overview

This report summarizes Nomura's Asia Technology Tour held in Seoul on August 20-21, 2026, which was attended by more than 10 companies. The core conclusion is that the impact of AI infrastructure investment has spread from memory chips to passive components, ESS, power equipment, displays, and semiconductor materials. Meanwhile, long-term supply agreements, product-mix upgrades, and capacity constraints are jointly improving revenue and cash-flow visibility for certain companies.

Core views

Samsung Electronics remains constructive on memory supply and demand in 2027-28. Despite market concerns about oversupply, DRAM and NAND fulfillment rates remain only 60%-70%. The company has signed long-term agreements with five major data-center customers, with another five in final negotiations. Its goal is to allocate 60%-70% of capacity to five-year agreements with price floors, while retaining 30%-40% of capacity to capture price upside. Even beyond 2028, lengthy fab construction cycles and HBM's consumption of wafer resources could limit DRAM output growth to approximately 20%. HBM's revenue contribution is expected to continue rising, but management believes its cost structure is inferior and its margin will not exceed that of commodity DRAM. A potential downgrade in HBM specifications would more likely represent a temporary compromise caused by shortages than a structural weakening of demand. The company is investing early in P5 infrastructure, preparing P6, and adding 4nm capacity to meet demand from US chipmakers, ASIC customers, and internal Exynos orders; the current shareholder return remains 50% of free cash flow. The main changes at SK Hynix are stronger capital returns and improved visibility into long-term demand. The previous shareholder return ratio of 50% of free cash flow has changed from a ceiling to a floor. The company plans to repurchase and cancel shares over the next three months and will disclose more information in 3Q, including a potential dividend increase or special dividend. The company is discussing long-term agreements with approximately 10 customers, mostly with five-year terms, while price ceilings and floors will be used selectively. The primary objective is not to pursue the highest price but to lock in demand and cash flow. As the product mix shifts toward HBM4, management expects HBM prices to continue rising and believes that higher costs make the current pricing structure unlikely to decline. The company guides for DRAM bit growth slightly above 20% this year, including HBM. Nomura believes that combined Korean and Chinese capacity could drive NAND bit growth to 20%-30% in 2027-28. Incremental gains from future process migrations will diminish, increasing the importance of physical capacity expansion. The Yongin cluster plans to build four fabs by 2033, with M17 also providing support. Current NAND growth is mainly being driven by the migration to 321 layers and expansion of the Dalian fab. Management believes CXMT poses limited near-term risk to its advanced-memory business. If NVIDIA ultimately lowers HBM specifications, this would also more likely be a temporary phenomenon caused by supply shortages and could reverse once shortages ease. SEMCO's growth thesis derives from AI-server demand for high-specification passive components and substrates. Management expects data-center MLCC revenue contribution to rise in 2027, while even conventional IT revenue is growing in absolute terms. AI MLCCs have higher average selling prices, and product-mix improvement and price increases will support long-term operating margins. Agreements signed with hyperscale customers have one-year terms and 100% take-or-pay provisions and are expected to cover most MLCC revenue next year. The company is expanding capacity by more than 20% this year, but this remains insufficient to meet AI demand. As GPU power consumption increases, MLCC content per system is expected to continue growing through 2027-28, and industry utilization could approach full capacity from 2H26 through 2027. The company has also secured a KRW1.5tn, two-year silicon-capacitor contract with a hyperscale customer and is jointly developing glass core substrates with four customers, targeting initial mass production in 2028. Management also expects ABF operating margins to improve significantly next year. Samsung SDI is shifting its 2H26 focus further toward ESS and plans to begin producing LFP batteries at its Stellantis joint-venture plant in October 2026. On August 11, the company announced the acquisition of GM's stake in the Indiana joint-venture project, and the plant will also produce LFP batteries once completed. The Stellantis joint-venture plant currently operates one NCA battery production line for ESS with 7GWh of capacity. It plans to add 12GWh of LFP capacity in 4Q26 and another 10GWh in 1H27. Nomura names Samsung SDI as its top pick in the battery sector. The company exited operating losses in 2Q26 and expects ESS revenue to grow 30%-40% QoQ in 3Q26 and another 50%-60% QoQ in 4Q26. Management expects BBU and UPS revenue to increase 60%-70% YoY in 2026. The company will also sell a 5% stake in Samsung Display to Samsung Display for approximately KRW4.45tn. The transaction is expected to be completed on August 27, after which it will retain a 10.2% stake in Samsung Display. HD Hyundai Electric's second-quarter margin was temporarily below expectations due to a lower proportion of high-margin power equipment, a higher proportion of distribution business driven by Korea's semiconductor industry, and delayed revenue recognition for certain high-margin US projects because of installation delays. Addressing investor concerns that the USD5.2bn new-order guidance was conservative, management noted that orders are typically stronger in the first half while revenue is stronger in the second half, meaning seasonality must be considered when assessing the full year. The US accounts for approximately 70% of the company's order backlog, so the US revenue mix is expected to continue rising. Middle Eastern orders weakened in the second quarter due to signing delays, while some new-order slots are being reallocated to Europe. Driven by US hyperscale customers' investments in Europe, the European business is expected to grow significantly, with margins already at or above Middle Eastern levels. AI data centers are becoming a new growth pillar: the company signed an approximately KRW1.1tn long-term agreement with a major technology customer for delivery in 2027-28 and expects data-center-related orders as a percentage of new power-equipment orders to rise from 1.8% in 2025 to 16.0% in 2027. It is also in discussions with three additional major technology companies. The main output constraint is a shortage of skilled workers, and power-transformer delivery lead times have extended to approximately four years. Delivery lead times for distribution and rotating equipment have normalized. LG Display raised its shipment expectations for large television and OLED monitor panels as well as small smartphone and smartwatch panels, and OLED's revenue contribution could continue to increase. Nomura sees three supports for 2H26: higher shipment volumes, increased share at a major US customer, and a product mix more heavily weighted toward premium smartphones than last year. Rising chip and material costs remain a headwind, but management remains confident of achieving strong YoY operating profit growth. The mid-sized IT panel business will shift from broadly supplying LCDs to serving only selected strategic customers to improve profitability. Given the lack of cash resources required to invest immediately in foldable-panel capacity, Nomura expects the company to focus more on conventional flat-panel displays. In small-sized displays, Chinese competitors have a low market share due to technological changes, making near-term profitability pressure relatively manageable. HPSP's second-quarter operating margin exceeded 60%, driven by higher average selling prices and favorable exchange rates. Its application mix is changing significantly: as customers adopt higher-layer-count NAND, NAND is expected to become the largest revenue contributor in 2027, while foundry and DRAM contributions will be similar but smaller. Management believes near-term market-share risk is limited because competitors remain two to three years away from mass-production qualification, and their currently delivered equipment is primarily used for R&D rather than commercial production. The company's current capacity is 100 systems per year. If customers indicate that 2028 demand will exceed existing capacity, the company could make a capital expenditure decision between 4Q26 and 1Q27. Land near its headquarters has been secured, and cleanrooms can be leased as an interim measure before expansion. Soulbrain's semiconductor materials business has entered an upcycle. Second-quarter revenue reached KRW312bn, up 18.3% QoQ and 36.3% YoY, mainly driven by new-fab ramp-ups at major memory manufacturers since 2Q25. Rising raw-material costs related to issues in the Strait of Hormuz caused margin growth to lag revenue growth, but management expects to pass costs downstream in 2H. The semiconductor division accounts for 84% of sales, with etchants, CMP slurry, and precursors all benefiting from higher fab utilization, customers' new production lines, and volume growth at overseas plants. The company says its share of core materials at Korean memory customers is 80%-100%. The display business accounts for 7% of sales. Its sharp YoY decline mainly reflects the exit from the thin-glass business in 2Q25; excluding this factor, revenue was flat, and growth from new products is expected in 2H27 through 2028. The battery business accounts for 7%-8% of sales, below the historical level of approximately 20%, with current utilization at approximately 20%. Management believes revenue of approximately KRW60bn in 2025 could represent the bottom, with the subsequent recovery dependent on ESS demand and an electric-vehicle market recovery. Higher NAND layer counts increase material consumption, and the company has a near-monopoly in HSN etchant for 3D NAND. Customers are prioritizing yields over price reductions this year, implying that average selling prices could rise. Wet-etchant utilization is approximately 60%, and the company is expanding capacity through automation while seeking to reduce its concentration, with approximately 90% of revenue coming from Korean semiconductor customers.

Analysis framework

The report uses management meetings held during the Seoul Asia Technology Tour on August 20-21 as its primary information source. It reviews each company's supply-demand conditions, long-term agreements, capacity and delivery constraints, product mix, pricing, and margin changes, and then assesses how these factors affect revenue, cash-flow, and earnings visibility from 2H26 through approximately 2028. For memory, MLCCs, and power equipment, the analysis focuses on matching demand growth with supply constraints. For battery, display, and materials companies, it places greater emphasis on business-mix changes, capacity additions, customer share, and cost pass-through.

Methodology notes

• Event Gaming and Behavioral FinanceEvent-driven analysis

  Management meetings during the technology tour

  The report treats management disclosures during the tour regarding orders, capacity, pricing, capital returns, and investment plans as event information that updates operating assessments, and uses them to summarize the principal changes at each company.

• Industry/Sector Analysis FrameworkSupply-demand framework

  Analysis of tight supply-demand conditions and capacity constraints

  The report combines fulfillment rates, long-term agreement coverage, bit growth, capacity expansion pace, utilization, and delivery lead times to assess whether tight conditions in memory, MLCCs, and power transformers can persist.

• Industry/Sector Analysis FrameworkVolume-price decomposition

  Decomposition of shipments, pricing, and product mix

  The report separately examines shipment or capacity growth, changes in average selling prices, and increases in the proportion of high-end products to explain revenue and margin changes at SEMCO, LG Display, HPSP, and Soulbrain.

• Industry/Sector Analysis FrameworkUpstream, midstream, and downstream value-chain transmission

  Transmission of AI infrastructure demand

  The report tracks how AI-chip and data-center investment is transmitted beyond HBM demand to MLCCs, silicon capacitors, power equipment, ESS, displays, and semiconductor materials.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Samsung Electronics (005930 KS)

  Memory shortages, long-term agreements, and AI-related 4nm demand improve medium-term operating visibility.

  Strengths

  DRAM and NAND fulfillment rates are low, five data-center customers have already been secured, and another five are in final negotiations, while the company is preparing P5, P6, and additional 4nm capacity.

  Weaknesses

  HBM profitability is lower than that of commodity DRAM, and HBM consumes wafer resources.

  Comparison

  Management expects HBM margins not to exceed commodity DRAM margins and emphasizes the trade-off between their costs and wafer resources.

  Risks

  Sharp price increases are unlikely to persist over the long term, and a rising HBM revenue contribution may not translate into higher margins.

• SK Hynix (000660 KS)

  Long-term agreements, an HBM4 product-mix upgrade, and higher capital returns constitute the principal positive drivers.

  Strengths

  A 50% free-cash-flow return has become the floor for shareholder returns, and the company is discussing agreements, mostly with five-year terms, with approximately 10 customers.

  Weaknesses

  Capacity growth from process migration will gradually weaken, leaving future growth more dependent on physical capacity expansion.

  Comparison

  Management believes the company's focus on advanced memory limits the potential threat from CXMT; a potential NVIDIA specification downgrade is more likely to be a temporary, supply-driven adjustment.

  Risks

  New capacity has long construction lead times, and if supply constraints persist, customers could temporarily compromise on specifications.

• SEMCO (009150 KS)

  AI servers are driving demand growth for high-specification MLCCs, silicon capacitors, and substrates.

  Strengths

  The company offers a one-stop solution for passive components and substrates and has secured a KRW1.5tn silicon-capacitor contract.

  Weaknesses

  Capacity expansion of more than 20% this year remains insufficient to meet AI demand.

  Comparison

  AI MLCCs have higher average selling prices than conventional products, and agreements with hyperscale customers use one-year terms and 100% take-or-pay provisions.

  Risks

  Insufficient capacity could constrain the near-term conversion of demand into sales.

• Samsung SDI (006400 KS)

  ESS and new LFP capacity are becoming the core growth sources from 2H26 through 1H27.

  Strengths

  The company exited operating losses in 2Q26, and Nomura names it the top pick in the battery sector; ESS revenue and backup-power demand are growing strongly.

  Weaknesses

  Growth depends on new LFP lines beginning production as scheduled and continued ESS volume growth.

  Comparison

  Compared with the conventional electric-vehicle battery theme, the report places greater emphasis on ESS, BBU, and UPS demand.

• HD Hyundai Electric (267260 KS)

  US grid-equipment demand and AI data-center orders are opening new growth opportunities.

  Strengths

  The US accounts for approximately 70% of backlog, and the company has signed an approximately KRW1.1tn AI data-center long-term agreement.

  Weaknesses

  A shortage of skilled workers constrains power-transformer output, with delivery lead times of approximately four years.

  Comparison

  European business margins have reached or exceeded Middle Eastern levels, and some order resources are being reallocated from the Middle East to Europe.

  Risks

  Installation delays could postpone revenue recognition for high-margin US projects.

• LG Display (034220 KS)

  Improving shipments, customer share, and the premium smartphone product mix support 2H26 earnings growth.

  Strengths

  Shipment expectations for large- and small-sized displays are improving, while OLED's contribution and share at a major US customer could increase.

  Weaknesses

  Insufficient cash resources constrain immediate investment in foldable-panel capacity.

  Comparison

  Chinese competitors have a low share of the small-sized display market due to technological changes, leaving LG Display's near-term competitive pressure relatively manageable.

  Risks

  Rising chip and material costs remain a headwind to margins.

• HPSP (403870 KS)

  Higher NAND layer counts are changing the application mix, with NAND expected to become the largest contributor in 2027.

  Strengths

  The second-quarter operating margin exceeded 60%, and competitors remain two to three years away from mass-production qualification.

  Weaknesses

  Current capacity is only 100 systems per year, and 2028 demand could reach the capacity ceiling.

  Comparison

  Competitors' current equipment is primarily used for R&D and has not yet entered commercial mass production.

  Risks

  If customer demand exceeds existing capacity, the company will need to make a timely expansion decision.

• Soulbrain (357780 KS)

  Memory-fab ramp-ups, higher NAND layer counts, and increased material consumption are driving the semiconductor business into an upcycle.

  Strengths

  The semiconductor division accounts for 84% of sales, its share of core materials at Korean memory customers is 80%-100%, and it has a near-monopoly in HSN etchant.

  Weaknesses

  Approximately 90% of revenue comes from Korean semiconductor customers, while battery-business utilization is approximately 20%.

  Comparison

  The YoY decline in the display business mainly reflects the exit from thin glass rather than deterioration in the remaining business; excluding this factor, revenue was flat.

  Risks

  Rising raw-material costs are suppressing margins, and customer concentration is high.

Key data

• Tour dates and scaleAugust 20-21, 2026; more than 10 companiesNomura held the Asia Technology Tour in Seoul
• Samsung Electronics memory fulfillment rate60%-70%Both DRAM and NAND have low fulfillment levels
• Samsung Electronics long-term agreement customersFive signed, with another five in final negotiationsAll are major data-center customers
• Samsung Electronics capacity target for long-term agreements60%-70%Five-year terms with price floors, while retaining another 30%-40% of capacity
• Samsung Electronics shareholder return50% of free cash flowThe current policy remains unchanged
• SK Hynix capital return floor50% of free cash flowChanged from the previous ceiling to a floor
• SK Hynix long-term agreement discussionsApproximately 10 customers, mostly with five-year termsThe focus is on improving demand and cash-flow visibility
• SK Hynix DRAM bit growthSlightly above 20% this yearIncluding HBM
• SK Hynix NAND bit-growth assessmentCould reach 20%-30% in 2027-28Nomura's assessment of combined Korean and Chinese capacity
• SEMCO capacity expansionMore than 20% this yearManagement says this remains insufficient to meet AI demand
• SEMCO silicon-capacitor contractKRW1.5tn, with a two-year termFrom a hyperscale customer
• Samsung SDI ESS revenue growthUp 30%-40% QoQ in 3Q26; up 50%-60% QoQ in 4Q264Q26 driven by the start of LFP production at the Stellantis joint-venture plant
• Samsung SDI additional LFP capacity12GWh in 4Q26; another 10GWh in 1H27The Stellantis joint-venture plant currently has another 7GWh of NCA ESS capacity
• Samsung SDI backup-power business growthUp 60%-70% YoY in 2026Covering BBU and UPS revenue
• Samsung Display equity transactionSale of a 5% stake for approximately KRW4.45tnExpected to close on August 27, after which Samsung SDI will retain 10.2%
• HD Hyundai Electric new-order guidanceUSD5.2bnManagement noted that the seasonality of orders and revenue recognition should be considered
• HD Hyundai Electric US share of backlogApproximately 70%The US revenue contribution is expected to continue rising
• HD Hyundai Electric AI data-center long-term agreementApproximately KRW1.1tnScheduled for delivery in 2027-28
• Data-center order contribution1.8% in 2025; 16.0% in 2027As a percentage of HD Hyundai Electric's new power-equipment orders
• HPSP second-quarter operating marginAbove 60%Driven by higher average selling prices and favorable exchange rates
• HPSP current capacity100 systems per yearIf 2028 demand exceeds capacity, the company could decide to expand between 4Q26 and 1Q27
• Soulbrain second-quarter revenueKRW312bnUp 18.3% QoQ and 36.3% YoY
• Soulbrain business mixSemiconductors 84%; displays 7%; batteries 7%-8%The battery business contribution is below the historical level of approximately 20%
• Soulbrain battery-business utilizationApproximately 20%Management believes 2025 revenue of approximately KRW60bn could represent the bottom
• Soulbrain concentration among domestic semiconductor customersApproximately 90%The company is pursuing customer diversification

Impact & implications

The report believes AI investment is no longer reflected solely in GPU or HBM demand, but is spreading through power consumption, storage capacity, backup power, and grid construction to MLCCs, silicon capacitors, ESS, power transformers, and semiconductor materials. Long-term agreements and price-protection provisions can improve revenue and free-cash-flow visibility for memory and component companies, but supply constraints are also extending from fab construction cycles to cleanrooms, equipment capacity, and skilled labor. The timing of benefits differs across companies: memory and MLCCs are already in a tight-supply phase; incremental growth in ESS and AI data-center power equipment is concentrated from 2H26 through 2027-28; and contributions from glass core substrates and certain new materials are more weighted toward approximately 2028.

Risks

• Samsung Electronics expects memory prices to retain momentum, but steep price increases are unlikely to persist for many years, and HBM margins will not exceed commodity DRAM margins.
• SEMCO's capacity expansion of more than 20% this year still cannot fully meet AI demand, and capacity could constrain order fulfillment.
• HD Hyundai Electric faces a shortage of skilled workers, and power-transformer delivery lead times have extended to approximately four years.
• LG Display continues to be affected by rising chip and material costs, while cash constraints limit immediate investment in foldable panels.
• Soulbrain is affected by rising raw-material costs, approximately 90% concentration among Korean semiconductor customers, and low utilization in its battery business.

What to watch

• Watch for Samsung Electronics to disclose specific terms such as capacity allocation and price floors after signing additional long-term agreements.
• Watch SK Hynix's share repurchases and cancellations over the next three months, as well as a potential dividend increase or special-dividend arrangement announced in 3Q.
• Watch SEMCO's MLCC utilization from 2H26 through 2027, agreement coverage among hyperscale customers, and progress toward glass core substrate mass production in 2028.
• Watch Samsung SDI's commencement of LFP production in October 2026 and progress in adding 12GWh and 10GWh of capacity in 4Q26 and 1H27, respectively.
• Watch whether HD Hyundai Electric's data-center order contribution can rise from 1.8% in 2025 to 16.0% in 2027, as well as discussions with three additional major technology companies.
• Watch LG Display's shipment volumes, share at its major US customer, and changes in its premium smartphone product mix in 2H26.
• Watch whether HPSP makes an expansion decision between 4Q26 and 1Q27 to address potential 2028 demand.
• Watch Soulbrain's raw-material cost pass-through in 2H, automated wet-etchant capacity expansion, and customer-diversification progress.