Huatai Securities: South Korea's $1.3 trillion strategic landing, focusing on global semiconductor equipment companies positioning in storage cycle.

Huatai Securities pointed out that on June 29, South Korean President Lee Jae-myung presided over the "Three Super Projects for the Great Leap of the Republic of Korea" at the Blue House, with Samsung Electronics Chairman Lee Jae-yong and SK Group Chairman Choi Tae-won directly announcing investment plans. The strategic plan covers the years 2026-2036, with a total investment of approximately 20 trillion Korean won. The project, with "semiconductors, AI data centers, and physical AI" as the three main pillars, aims to break the industrial monopoly in the Seoul metropolitan area of South Korea, shift national resources to Gwangju, Daegu, and Chungcheong regions outside the capital area, and is a landmark event for the development of South Korea's technology industry. The investment scale of 1.3 trillion US dollars is equivalent to 7.8 times the investment scale of TSMC in Arizona, USA, and may have profound effects on the global semiconductor industry competition landscape and supply-demand relationship. Huatai Securities believes that under the high prosperity of AI, advanced processes, HBM, and expansion of advanced packaging capacity will bring sustained equipment incremental demand, and equipment manufacturers may benefit from long-term structural positives under this round of decade-long cross-investment. Companies in the industry chain overseas include leading lithography equipment, deposition and etching equipment, and coater/developer equipment suppliers globally, as well as companies with a high proportion of storage revenue; Chinese related companies include cleaning equipment manufacturers and heat treatment equipment manufacturers with business layout in Korea.