'Hynix Hits New High' Busy Searching for HBM Beneficiaries... "Focus on Front-End Process Companies"

As the artificial intelligence (AI) server market rapidly grows, demand for high-bandwidth memory (HBM) is increasing. In the domestic stock market, SK Hynix has been continuously hitting 52-week highs, sparking active efforts to identify beneficiaries of HBM investments. Since last year, the stock prices of back-end equipment companies have surged, and the Yeouido securities industry now advises focusing on front-end companies.

According to the financial investment industry on the 12th, SK Hynix's stock price has risen 50% this year. During the previous day's trading, the stock price reached 215,000 KRW at one point, marking a 52-week high.

Kim Kwangjin, a researcher at Hanwha Investment & Securities, said, "The proportion of HBM sales within SK Hynix's DRAM business, the market leader, is expected to rise from 13% last year to 41% next year," adding, "This will increase sales from 2.6 trillion KRW to 19.4 trillion KRW." Chaemin-sook, a researcher at Korea Investment & Securities, analyzed, "The next-generation product HBM3e completed certification in March this year and has started mass production sales," and "Regardless of competitors' certification status, SK Hynix will maintain its advantage up to HBM3e."

With the generational shift in AI accelerators, the amount of HBM used per unit is increasing compared to the past. As product performance and heat dissipation characteristics raise design and process complexity, productivity is declining. This is why there is a growing need to expand new front-end investments to secure additional HBM production capacity. SK Hynix, which has a high proportion of HBM sales, is also expected to invest. SK Hynix began construction of the Cheongju M15X plant at the end of Q2 this year, aiming for mass production next year. In the long term, it plans to invest over 20 trillion KRW in M15X and expand its production base.

Researcher Kim said, "Over the past two years, investment in the memory industry has changed rapidly in back-end processes compared to front-end," and "The attractiveness of the relatively neglected front-end value chain will increase."

Demand for front-end equipment is expected to rise from the bottom in 2023 until 2027, when the Yongin Semiconductor Cluster becomes active. Baek Gilhyun, a researcher at Yuanta Securities, analyzed, "Investments will continue domestically, including about 120 trillion KRW to be injected into the Yongin Cluster," and "From 2027, when the Yongin Semiconductor Cluster is completed, there is a high possibility that 300L 3D NAND investments will continue."

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Yuanta Securities expects VM to improve its performance among front-end equipment companies. VM is anticipated to break the monopoly of overseas equipment companies by leveraging price competitiveness. The global etching equipment market size is 23.8 billion USD, larger than the deposition equipment market at 18.3 billion USD. Researcher Baek said, "Etching equipment has a larger purchase scale than other semiconductor equipment," and "Since the number of suppliers is limited, VM is expected to secure its position in the global etching equipment market."

PSK is also one of the front-end equipment companies expected to improve its performance. Namgung Hyun, a researcher at Shinhan Investment Corp., analyzed, "In Q1 this year, operating profit reached 21.3 billion KRW, exceeding the market expectation of 14.5 billion KRW," and "The full-scale supply expansion of the Bevel Etcher launched in 2021 and the development of the Metal Etcher by the end of the year are also anticipated."

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