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Bernstein: Divergence in South Korea's Semiconductor Equipment Imports, AI Storage Investment Continues to Flow

On June 16, Bernstein analysts, including David Dai, reported that South Korea's semiconductor equipment imports in May decreased by 5% month-on-month, but the year-to-date growth rate has risen to 39% year-on-year. The firm believes that the import data is strongly correlated with the combined capital expenditures of Samsung and SK Hynix. Although both companies saw a quarter-on-quarter decline in capital expenditures in the first quarter, this mainly reflects seasonal factors and the pace of prior infrastructure investments, with subsequent expenditures expected to recover. The report indicates that South Korea imported lithography equipment from the Netherlands worth €928 million in May, a month-on-month increase of 28% and a year-on-year increase of approximately 150%, marking the second-highest level for the second month of a quarter on record. Bernstein estimates that ASML's system sales in South Korea for the second quarter will be around €2.31 billion, more than double year-on-year. Analysts suggest that this momentum may be supported by DRAM capacity expansion and the accelerated introduction of the 1c node, which requires higher intensity for lithography equipment. Testing equipment also shows positive signals. South Korea's imports of testing machines from Japan and Malaysia increased by 103% year-on-year and 5% month-on-month in May. Bernstein's regression model indicates that Advantest's sales in South Korea for the second quarter may grow by 84% quarter-on-quarter, significantly higher than the market's expectation of a 3% quarter-on-quarter increase in overall revenue. However, not all equipment supplier data is equally strong. Imports of wafer fabrication equipment related to Tokyo Electron in South Korea decreased by 27% month-on-month in May. Bernstein expects the company's sales in South Korea for the second quarter may decline by 15% quarter-on-quarter, below the market's expectation of flat revenue. Bernstein maintains an 'Outperform' rating on ASML, Advantest, Tokyo Electron, Samsung Electronics, and SK Hynix. The report suggests that the investment cycle in storage driven by AI continues to transmit upstream in the equipment supply chain, with the most notable prosperity in lithography, testing, and advanced DRAM expansion-related sectors.

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