Kosdaq semiconductor materials, parts and equipment stocks emerge as new center of AI rotation trade

Kosdaq-listed semiconductor materials, parts and equipment stocks are on a strong run as the rotation trade within the semiconductor sector shifts from large-cap names toward smaller equipment and component plays. Exchange-traded funds tracking the segment have joined the rally.

Major semiconductor process, equipment and materials ETFs all surged Friday. The HANARO Semiconductor Core Process Leaders ETF climbed roughly 9 percent, SOL Semiconductor Front-End Process rose about 8 percent, and KODEX AI Semiconductor Core Equipment gained around 6 percent. SOL AI Semiconductor Materials and SOL Semiconductor Back-End Process each added about 5 percent, while TIGER AI Semiconductor Core Process rose approximately 4 percent. The gains followed an even sharper session Thursday, when SOL Semiconductor Front-End Process surged 13.34 percent and SOL AI Semiconductor Materials jumped 11.97 percent, with most major semiconductor process and equipment ETFs posting advances of 8 to 13 percent.

These ETFs are weighted heavily toward Kosdaq-listed semiconductor equipment, process and materials companies rather than large-cap names such as Samsung Electronics and SK Hynix. Among the top Kosdaq stocks by market capitalization Thursday, Jusung Engineering soared 23.37 percent, while Wonik IPS climbed 20.82 percent. EO Technics rose 15.07 percent and Lino Industrial gained 7.31 percent.

Market participants view the surge as a rotation within the semiconductor sector rather than a departure from the AI- and chip-driven rally. The prevailing analysis is that buying interest has spread to equipment and materials stocks — which had recently pulled back — after large-cap semiconductor names such as Samsung Electronics and SK Hynix already went through sharp swings of their own.

Lee Gyeong-min, a researcher at Daeshin Securities, said the export data played a major role in Thursday's spike in semiconductor materials stocks and the triggering of a Kosdaq buy-side sidecar. "South Korea's exports from June 1 to 10 hit an all-time high, with semiconductor exports surging 205.8 percent and computer exports jumping 259.4 percent, making the IT-led improvement in exports unmistakable," he said. He added that growing expectations that strong exports could reinforce corporate earnings momentum had highlighted the undervaluation of semiconductor materials stocks, which had been relatively overlooked compared with large-cap chip names, drawing in heavy buying.

Policy expectations are also cited as a factor supporting investor sentiment toward Kosdaq semiconductor materials stocks. The National Growth Fund and Kosdaq revitalization measures are seen as key variables for the Kosdaq market in the second half of the year. Kwon Myeong-jun, a researcher at Yuanta Securities Korea, said he expects the first round of National Growth Fund investment to begin in the second half of this year. "The first tranche sold out entirely, and the second tranche is expected to go on sale in September," he said.

Expectations for a Kosdaq structural overhaul in July are adding to the positive sentiment. Kwon said he expects a plan to restructure Kosdaq's market segments — a premium tier, a standard tier and a watchlist group — to take shape around the Kosdaq 30th anniversary event on July 1. "The details should become clearer in June," he said, adding that the overhaul "could serve as a starting point for improving investor sentiment toward Kosdaq."