💿 How to View US and Korean Materials, Parts, and Equipment Differently

When it comes to investing in AI semiconductors, most people first think of a set group of companies: large-cap stocks like NVIDIA, TSMC, ASML, SK hynix, and Samsung Electronics. These are undoubtedly the companies at the heart of AI infrastructure. The problem, however, is that the market is already well aware of this. The fact that a company is good and the fact that it's a good investment opportunity are always two different things.

That's why I've recently been looking in a slightly different direction. As more AI semiconductors are sold and as they become more complex to manufacture, certain areas become indispensable: process equipment, inspection equipment, test equipment, materials, parts, and gas/chemical supply systems. These are the so-called "so-bu-jang," or materials, parts, and equipment companies.

However, U.S. and Korean materials, parts, and equipment stocks should not be viewed in the same way. U.S. companies in this sector generally have a strong global customer base and an independent technology position in specific processes. For example, $ACLS specializes in ion implantation equipment, $VECO in laser annealing, ion beam deposition, and compound semiconductor equipment, $ONTO in advanced packaging inspection and metrology, and $ENTG in filters, materials, and contamination control. Their respective domains are relatively clear. Their customers are also often spread across global foundries, IDMs, OSATs, and equipment makers, rather than relying solely on specific Korean memory companies.

On the other hand, Korean materials, parts, and equipment stocks are a bit different. Even with strong technology, they are heavily influenced by the investment cycles of specific large customers like Samsung Electronics, SK hynix, and LG Display, and whether they pass qualification. While U.S. companies are more like "companies that sell solutions to global process bottlenecks," Korean companies are often closer to "companies that localize or advance specific processes within the domestic memory/foundry supply chain."

This difference is important from an investment perspective. For U.S. materials, parts, and equipment stocks, you should first look at their technology position and global market share. For their Korean counterparts, in addition to technology, you must also consider customer adoption status, the speed of transition to mass production, localization trends, the CAPEX cycles of Samsung Electronics and SK hynix, and the investment direction for HBM and advanced packaging.

This doesn't mean Korean materials, parts, and equipment stocks are less attractive. On the contrary, as AI semiconductors move towards HBM, chiplets, hybrid bonding, CoWoS, PLP, CXL, and high-performance SSDs, new opportunities are opening up for Korean companies. Companies that were previously tied to front-end process and memory cycles can now be re-evaluated based on more specific bottlenecks like advanced packaging, HBM testing, nano-metrology, laser annealing, cleaning/CMP, specialty gases, and test sockets.

The key point I'm focusing on now is simple.

Instead of chasing expensive AI leader stocks, I'm looking for the essential bottlenecks that emerge as AI semiconductors become more complex.

In the U.S., companies like $ACLS, $VECO, $ONTO, $ACMR, $COHU, $MKSI, $ICHR, $AEHR, and $ENTG fit this perspective. So, which companies in the Korean market are on a similar track? While there isn't a perfect 1:1 correspondence, breaking it down by process reveals some quite interesting candidates.

1. Korean "So-Bu-Jang" Candidates Corresponding to U.S. Peers

There is one point to be cautious about here. Korean companies often don't have a "perfect 1:1 correspondence" with their U.S. counterparts. U.S. equipment makers have broad, global product portfolios, while Korean "so-bu-jang" companies often have a high dependency on specific customers, especially Samsung Electronics and SK hynix. Therefore, for the Korean plays, you need to look at technology + customer qualification + localization/supply chain internalization + capacity expansion cycles all together.

2. Key Korean "So-Bu-Jang" Candidates I'd Watch First

A-List: Top Candidates to Watch

These 8 companies are the most natural extensions of the U.S. ACLS-type thesis.

3. Detailed Analysis

1) $K039030 EOTechnics

The closest candidate to a Korean version of $VECO

EOTechnics is the first company that comes to mind when looking at laser-based semiconductor equipment in Korea. It's not just a simple marker equipment company; it has expansion potential into laser annealing, laser cutting, grooving, debonders, and UV drillers.

A Samsung Securities report explained that EOTechnics contributes to DRAM scaling in the front-end process with its laser annealing equipment, and in the back-end, it possesses equipment that contributes to Advanced Packaging, such as laser grooving, debonders