South Korea's Tech Industry Set for AI Supply Chain Boom, Physical AI Poised to Emerge
AI summary card
South Korea's Tech Industry Set for AI Supply Chain Boom, Physical AI Poised to Emerge
The South Korean tech industry benefits from growing AI demand, with significant advantages for memory, equipment, and materials companies. The report assigns a buy rating to Samsung Electronics, SK Hynix, and others.
- Memory/substrate/MLCC benefit from increasing AI server demand
- AI server shipments expected to grow by 70% in 2026
- Semiconductor equipment and materials companies benefit from robust capital expenditure
- HBM capacity expected to reach 10.7 billion in 2027
- Samsung Electronics and SK Hynix receive buy ratings
Report interpretation
Overview
This HSBC research report analyzes the latest trends in South Korea's tech industry, focusing on the impact of surging AI demand on the memory, equipment, and materials sectors. The report notes that memory/substrate/MLCC benefits from increasing AI server demand, with AI server shipments expected to grow by 70% in 2026. Semiconductor equipment and materials companies benefit from robust capital expenditure, and HBM capacity is expected to reach 10.7 billion in 2027. Samsung Electronics and SK Hynix have been assigned buy ratings.
Core views
The report indicates that South Korea's tech industry benefits from growing AI demand, especially memory, equipment, and materials companies. Memory/substrate/MLCC benefits from increasing AI server demand, with AI server shipments expected to grow by 70% in 2026. Semiconductor equipment and materials companies benefit from robust capital expenditure, and HBM capacity is expected to reach 10.7 billion in 2027. The report finds that Samsung Electronics and SK Hynix are attractively valued, assigning them buy ratings.
Analysis framework
The report evaluates the investment value of relevant companies by analyzing the impact of growing AI demand on the memory, equipment, and materials industries, combining market data and company financial indicators. It uses price-earnings ratios, price-to-book ratios, and other financial metrics, referencing historical data and future forecasts within the industry.
Methodology notes
The price-to-earnings ratio (PE) is an important measure of stock valuation, calculated as the share price divided by earnings per share.
The PE ratio is used to assess the relative value of stocks; a higher PE may indicate higher market expectations for future profitability.
The price-to-book ratio (PB) is another key measure of stock valuation, calculated as the share price divided by net assets per share.
The PB ratio assesses the relationship between book value and market value; a lower PB may indicate undervalued stock.
The supply-demand framework analyzes changes in supply and demand within an industry, affecting prices and profitability.
The report evaluates the impact of AI demand growth on the memory, equipment, and materials industries by analyzing the effects of supply-demand relationships on industry prospects.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Samsung Electronics (005930.KS)Benefiting from AI demand growth
- Strengths
- Strong market position and high profit margins
- Weaknesses
- Currency fluctuation risk
- Comparison
- Better than industry average
- Risks
- Currency fluctuations, global trade restrictions
- SK Hynix (000660.KS)Benefiting from AI demand growth
- Strengths
- Technological leadership and high market share
- Weaknesses
- Currency fluctuation risk
- Comparison
- Better than industry average
- Risks
- Currency fluctuations, global trade restrictions
- EO Technics (039030.KQ)Benefiting from AI demand growth
- Strengths
- Technological leadership and high market share
- Weaknesses
- Intensified market competition
- Comparison
- Better than industry average
- Risks
- Market competition, technological updates
- HPSP (403870.KQ)Benefiting from AI demand growth
- Strengths
- Technological leadership and high market share
- Weaknesses
- Intensified market competition
- Comparison
- Better than industry average
- Risks
- Market competition, technological updates
- Park Systems (140860.KQ)Benefiting from AI demand growth
- Strengths
- Technological leadership and high market share
- Weaknesses
- Intensified market competition
- Comparison
- Better than industry average
- Risks
- Market competition, technological updates
- Hansol Chemical (014680.KS)Benefiting from AI demand growth
- Strengths
- Technological leadership and high market share
- Weaknesses
- Intensified market competition
- Comparison
- Better than industry average
- Risks
- Market competition, technological updates
Key data
- Memory DemandExpected 70% growth in 2026Memory demand is expected to grow by 70% in 2026
- HBM Capacity10.7 billionHBM capacity is expected to reach 10.7 billion in 2027
- Price-to-Earnings Ratio2.9x (Samsung)Samsung Electronics' price-to-earnings ratio is 2.9 times
- Price-to-Book Ratio2.8x (SK Hynix)SK Hynix's price-to-book ratio is 2.8 times
- Target Price450000 KRW (Samsung)Samsung Electronics' target price is 450000 KRW
Impact & implications
The report indicates that South Korea's tech industry benefits from growing AI demand, especially memory, equipment, and materials companies. Memory/substrate/MLCC benefits from increasing AI server demand, with AI server shipments expected to grow by 70% in 2026. Semiconductor equipment and materials companies benefit from robust capital expenditure, and HBM capacity is expected to reach 10.7 billion in 2027. Samsung Electronics and SK Hynix have been assigned buy ratings.
Risks
- Currency fluctuations
- Global trade restrictions
- Intensified market competition
- Technological updates
What to watch
- Impact of AI demand growth on the memory, equipment, and materials industries
- Growth situation of AI server shipments in 2026
- Growth trend of HBM capacity
- Market performance of Samsung Electronics and SK Hynix