Back-end chip suppliers lift the KOSDAQ to its first close above 900 since July

Seoul Economic Daily describes a trickle-down that runs from the large-cap chipmakers on the main board to the firms that supply their materials, parts and equipment ^[1]. The back-end names rose on expectations that demand for AI and high-bandwidth memory will drive more investment in packaging and testing ^[2]. The KOSDAQ has split from Samsung Electronics and SK hynix on share price ^[7]. On cash, or rather on the cash its leaders expect to earn, it has not split: the spending those suppliers are priced on still comes down from the main-board chipmakers ^[1].

Foreign money arrived after the run began. The seven back-end stocks' gains are measured from Sept. 1 ^[8], and September was a month of heavy foreign net selling on the KOSDAQ ^[13]. Foreign investors bought a net 111 billion won on Oct. 6 alone, and institutions added 101.9 billion won ^[12]. That one session is about 65% of foreign net buying so far in October ^[21]. October's buying offsets roughly 12% of September's selling ^[22].

Turnover is the firmer signal. Average daily turnover in October is about 47% above August's ^[14][23], though the October figure covers only the month's first sessions. As recently as three or four months ago, there were days when 16 single-stock leveraged products on Samsung Electronics and SK hynix out-traded the entire KOSDAQ ^[15].

If the next earnings reports from the packaging and test houses show the orders, the prices will have reported profit behind them. Reports that show only expectations would hit SFA Semicon hardest, since it is up 100.17% since Sept. 1 ^[8]. A cut in chipmaker capital spending would remove the revenue the suppliers' prices assume. Attention would then go back to the KOSDAQ's market structure. A KRX official said follow-up measures would be prepared soon after the court ruling ^[18], and the detailed plan for a promotion-and-relegation segment system due next year has not been disclosed ^[19].

I think the KOSDAQ is still trading the large caps' AI story, one step down the supply chain. Kang Jin-hyuk, a senior researcher at Shinhan Securities, called it rotation. "While large-cap chipmakers such as Samsung Electronics and SK hynix are taking a breather, the KOSDAQ is seeing rotation centered on materials, parts and equipment stocks," he said. "With momentum in semiconductor capital spending continuing, the strength of related stocks stands out." ^[3]

The counter-case is breadth. HLB rose 17.18% and Samchundang Pharm 16.43% on Oct. 6 ^[11], and neither move depends on a chip budget. Even the battery gain came through a main-board partner: EcoPro BM rose 11.41% after signing a memorandum with Samsung SDI on all-solid-state battery materials ^[10]. The view is wrong if biotech and battery names keep lifting the index after chip equipment stalls. It is also wrong if the back-end stocks hold their gains through a cut in chipmaker spending.

From the Oct. 6 close, the index would need a gain of about 33% to retake its April 27 peak of 1,226.18 ^[16][24]. It is still 9.43 points under its July 1 close ^[25].