‘Memory generation change’ rebounds… Semiconductor materials, parts, and jangdo ‘running’


Share prices of semiconductor subsidiaries (materials, parts, and equipment) companies are jumping sharply. It is interpreted that expectations for an increase in demand are largely reflected when the semiconductor industry bottoms out. As analysis shows that the new DDR5 is at the center of the semiconductor upside, back-end process-related stocks are drawing attention.

As of 11:52 am on the 19th, the stock price of Hana Materials in the KOSDAQ market is showing 46,500 won, up 4800 won (11.54%) from the previous trading day. Hana Micron is up 6.36%, Dongjin Semichem is up 8.77%, Soulbrain is up 5.85%, and ISC is up 17.09%.

The reason why the stock prices of semiconductor components and equipment stocks soared on this day is because the market is signaling the bottom of the semiconductor industry every day and expectations for the super cycle are growing. Large semiconductor stocks such as Samsung Electronics and SK Hynix are showing strength.

The previous day, in the US stock market, Nvidia shares closed 4.97% higher on the news of the release of a new graphics card. Micron rose 4.08% after announcing that it would invest 500 billion yen (about 5 trillion won) in the introduction of state-of-the-art semiconductor production facilities in Hiroshima, Japan. The Philadelphia Semiconductor Index closed at 3223.49, up 3.16% from the previous day.

The stock market sees the current semiconductor cycle as being in the inventory reduction phase of downstream industries. Therefore, when expectations for an increase in demand emerge, small and medium sized companies seem to be absorbing this expectation one step ahead.

Kim Gwang-jin, a researcher at Hanwha Investment & Securities, said, “Depletion of inventory due to supply reduction eventually creates expectations for demand recovery → production normalization → capex (capex capital expenditure) normalization.” “I relatively prefer equipment stocks that occur.”

DDR5, a new memory product, seems to be at the center of the semiconductor industry’s upside. DDR5 is evaluated to be faster and consume less power than existing products.

Hwang Min-seong, a researcher at Samsung Securities, said, “The new product (128GB DDR5) for AI servers continues to be ordered even though it is 10 times more expensive than the existing 64GB DDR4.” Although this is sluggish, demand for LPDDR5 is not bad.”

“DDR5 is expected to exceed 20% in the second quarter from 10% of SK Hynix’s total volume in the first quarter.”

The stock market view is that the upside momentum centered on DDR5 can have a more immediate and quicker impact on companies involved in semiconductor back-end processes. This is because current DDR5 customer or supplier inventory is very limited, and it may not go through the supplier’s finished product inventory depletion process. It is estimated that DDR5 accounts for less than 10% of the industry’s DRAM inventory.

“The low DDR5 inventory in the industry and the increase in DDR5 production by suppliers will immediately lead to an increase in P (price) and Q (sales volume) in the back-end process industry, which will become a differentiating point in the value chain,” said SK Securities. After the bottom line in the first quarter of this year, the recovery began, and the effects of DDR5 will begin in earnest in the third quarter of this year.”

Following this, SK Securities picked Hana Micron, Hanyang Digitech, Aviko Electronics, and ISC as noteworthy stocks.