The Korean AI boom is not over yet! Top fund managers say that the money "sucked" away by memory giants is now heading towards MLCC and substrates.

According to Zhitong Finance APP, a top fund manager focusing on the Korean market stated that when the market rebounds, Korean AI hardware component stocks with strong profit outlooks are likely to outperform memory chip giants.

Lee Wang-seop, head of equity investments and fund manager at Hana Asset Management, said in an interview this week that as the AI boom continues to spill over, capacitor manufacturers and AI substrate producers will benefit next year. He is also optimistic about renewable energy and energy storage suppliers, expecting persistent demand for data center services.

Among the major holdings in his KRW 748 billion (approximately $558 million) fund are capacitor manufacturer Samsung Electro-Mechanics and lithium battery developer Samsung SDI.

Lee Wang-seop said, “We have already extended our exposure to other areas of the AI value chain beyond semiconductors.” His Hana Korea IT Fund has achieved a 77% return so far this year, outperforming 99% of similar funds. “We are highly focused on the intersection of sectors and companies where profit growth outpaces the Korea Composite Stock Price Index (Kospi) and profit expectations are also being raised.”

As the Korean stock market is highly dependent on Samsung Electronics and SK Hynix, investors rushing to exit previously increased AI positions have dragged the benchmark Kospi index into a bear market as of Thursday. Lee Wang-seop’s strategy highlights that fund managers are repositioning outside these two giants in order to capture AI-related gains, rather than risk missing out on rebounds in other parts of the supply chain.

This fund manager expects that when the market rebounds, stocks in semiconductor materials, components, and equipment will outperform large memory chip manufacturers. He added that in several fields, including energy storage suppliers, next year’s net profit growth is expected to outpace Kospi.

“We are just now entering a stage where prices of standard packaging substrates and multilayer ceramic capacitors (MLCCs) are starting to rise significantly,” said Lee Wang-seop, manager of the “Hana IT Korea Securities Mother Fund.” “Though the duration and magnitude may not match memory chips, a similar cycle is expected to start. That’s why I’m most optimistic about this sector.”

The semiconductor industry has experienced ripple effects in pricing—AI demand first starts with high-end products such as high-bandwidth memory (HBM). Once those supplies become tight and prices rise, the boom spills over into standard DRAM, NAND, and other everyday chips and components. The packaging substrate sector may be experiencing a similar dynamic, with price increases first emerging in high-end products.

The profit scope of the AI supply chain has expanded beyond storage

Samsung Electro-Mechanics is one of the global leaders in the AI substrate and MLCC space, seeing its share price more than double this year, far outperforming memory chip manufacturers. Samsung SDI’s share price has also roughly doubled.

Despite a recent sell-off, Korea-focused funds are still expected to have a bumper year, with Kospi up about 35% cumulatively. Lee Wang-seop said his fund outperformed the benchmark largely due to early positions in front-end chip equipment makers such as TES Co.

Progressive Returns

Hana’s fund is still slightly overweight on Samsung Electronics and SK Hynix, given both companies’ huge influence on the market. But he said investors must face the following uncertainties: whether AI investments can remain resilient amid ongoing inflation, rising borrowing costs, and intensifying competition from Chinese chipmakers.

He is closely monitoring Korean chipmakers’ profit forecasts for 2027, noting that the market is divided on the outlook, and there is potential upside if analysts raise estimates. Another indicator he focuses on is whether foreign investors will continue to sell Korean stocks after SK Hynix completes its share buyback program.

“A rebound of that magnitude as in the past will be difficult to replicate for Korean memory chip manufacturers,” he said. “We will see some sectors’ share price returns exceed those of semiconductors.”