Semiconductor equipment stocks rallied across the board on Tuesday as Samsung Electronics (005930.KS) and SK hynix (000660.KS), the two memory chipmakers that have led Korea's stock market, took a breather in early trading. Buying momentum that had been concentrated in large-cap memory stocks expanded to materials, parts and equipment names, with rotational buying flowing particularly into front-end equipment stocks.
According to the Korea Exchange, as of 9:51 a.m. on Tuesday, Eugene Technology (084370.KQ) was trading at 155,700 won, up 35,900 won or 29.97%. Wonik IPS (240810.KQ) approached the daily price limit at 127,200 won, up 29,300 won or 29.93%. Tes (095610.KQ) was trading at 135,300 won, up 30,700 won or 29.35%, while VM (089970.KQ) was at 69,600 won, up 15,400 won or 28.41%.
Other equipment stocks also posted strong gains. PSK (319660.KQ) was trading at 112,700 won, up 22,100 won or 24.39%, and Jusung Engineering (036930.KQ) was at 243,000 won, up 46,100 won or 23.41%. PSK Holdings (031980.KQ) climbed 19,800 won or 19.68% to 120,400 won, while Nepes Ark (330860.KQ) rose 6,050 won or 16.78% to 42,100 won.
The strength in chip equipment stocks is attributed to buying momentum shifting toward relatively underperforming materials, parts and equipment names after Samsung Electronics and SK hynix paused following their short-term surge. Amid continued expectations for an improving memory cycle and expanded capital expenditure by customers, front-end equipment stocks—whose earnings estimates have been rapidly revised upward—have emerged at the center of the rotation.
Related exchange-traded funds (ETFs) are also climbing. The "SOL Semiconductor Front-End" ETF was up 16.63%, while the "HANARO Semiconductor Core Process Leaders" ETF rose 13.06%. Capital is flowing not only into individual equipment stocks but also broadly across the front-end equipment and core process value chain.
Front-end equipment is used in processes that build circuits on wafers and deposit or etch films. Demand for such equipment increases not only when semiconductor production capacity expands but also when process complexity rises. With growing investment expectations for high-bandwidth memory (HBM), next-generation DRAM, and higher-stack NAND, earnings improvement expectations for deposition, etching, and cleaning equipment makers are being reflected first.
Brokerages are also raising their earnings outlooks for materials, parts and equipment companies. In a recent semiconductor sector report, Hana Securities noted that capital expenditure by global memory makers is exceeding expectations, and analyzed that solid earnings and undemanding valuations at Tes and VM are supporting their stock prices. According to the report, Tes is expected to post operating profit of 105.7 billion won this year, up 83% year-on-year, while VM's operating profit is estimated at 98.5 billion won, a 299% increase.
However, given the size of the short-term surge, the possibility of expanded volatility remains. Earnings recognition for chip equipment stocks varies depending on customers' investment schedules and order timing. The market expects the rotation into equipment stocks to continue while large-cap memory stocks pause, but views actual orders and the pace of earnings improvement going forward as the factors that will determine further upside.
"After first-quarter earnings announcements, upward revisions to 2026 and 2027 estimates have come across the materials, parts and equipment sector," said Lee Dong-ju, an analyst at SK Securities. "In particular, earnings expectations for front-end equipment are running ahead of other sub-sectors."
