Combined market cap of 17 semiconductor firms climbs from 34.9 trillion to 83.7 trillion won; a 140% increase in nine months.
Biotech presence in the top 10 drops from seven firms to one; a clear shift in KOSDAQ market leadership.
Valuations now reflect growth expectations for AI and HBM; firms must prove their worth through bottom-line performance.
The upper echelon of the KOSDAQ market is undergoing a rapid transformation, increasingly dominated by semiconductor materials, parts, and equipment (SAPE) manufacturers. While the expansion of investment in artificial intelligence (AI) and high-bandwidth memory (HBM) is likely to bolster the earnings of the domestic semiconductor supply chain, a growing chorus of voices is calling for caution. Market participants are questioning whether current valuations have prematurely priced in future growth and if the sector’s concentration has reached an unsustainable level.
Semiconductor SAPE Dominates the KOSDAQ
An analysis of Korea Exchange (KRX) data by Market Times shows that as of the October 2 closing price, 17 of the top 30 firms on the KOSDAQ by market capitalization were directly involved in the semiconductor sector, representing 56.7% of the index's leadership.
This group includes companies such as Jusung Engineering, Wonik IPS, EO Technics, Simmtech, Leeno Industrial, HPSP, ISC, PSK, Fadu, PSK Holdings, Eugene Technology, Hana Micron, TES, TCK, Soulbrain, TSE, and Jeju Semiconductor.
Jusung Engineering, affectionately dubbed "Juseong-Jeonha" (His Majesty Juseong) by retail investors, is currently eyeing a spot among the KOSDAQ's top three. As of October 2, semiconductor-related stocks held six of the top 10 spots, a stark contrast to the start of the year (January 2), when no semiconductor firms were ranked in the top 10.
The total market capitalization of these 17 semiconductor-related firms rose from approximately 34.9 trillion won on January 2 to about 83.7 trillion won by October 2—an increase of nearly 48.9 trillion won, or roughly 140%, over nine months.
Jusung Engineering, in particular, saw its market cap explode from approximately 1.4 trillion won to 11 trillion won over the same period, propelling it to the fourth spot on the KOSDAQ.
Analysts attribute this rally to rising expectations for AI server investment, HBM capacity expansion, and a broader recovery in the memory semiconductor cycle. Strong earnings from Micron and the global scaling of AI infrastructure investment have further fueled optimism regarding order intake for domestic SAPE suppliers.
Biotech Fades from the Top 10
Conversely, the influence of KOSDAQ biotech stocks has waned rapidly. While Alteogen retains the top market cap spot, it is the only biotech firm left in the top 10. Including HLB (ranked 11th) and aesthetic medicine firm PharmaResearch, there are eight biotech companies in the top 30.
On the first trading day of the year, January 2, seven pharmaceutical and biotech companies—Alteogen, ABL Bio, HLB, LegoChem Biosciences, Kolon TissueGene, Peptron, and Samchundang Pharm—held positions in the KOSDAQ top 10. Their combined market cap was approximately 65.9 trillion won at that time. By October 2, the combined market cap of those same seven firms had shrunk to 38.6 trillion won—a decline of 27.3 trillion won, or 41%.
This shift cannot be explained solely by the relative decline of biotech as semiconductor stocks surged; rather, the decline in biotech and the expansion in semiconductors occurred in parallel. While the combined market cap of the seven biotech firms fell by 27.3 trillion won, the 17 semiconductor firms in the top 30 added 48.9 trillion won. In January, the biotech sector’s 65.9 trillion won market cap was 1.9 times larger than that of the top 30 semiconductor firms at the time (34.9 trillion won). By October, the relationship had inverted: the semiconductor cohort ballooned to 83.7 trillion won while the biotech group retreated to 38.6 trillion won.
This does not necessarily signal the end of the K-Biotech industry, but rather highlights how quickly growth narratives shift toward AI and semiconductors. The KOSDAQ has historically displayed a tendency for its market cap leadership to concentrate heavily in whichever sector carries the strongest growth story.
Between Paradigm Shift and Overheating
AI and HBM represent structural changes that go beyond mere market trends. The proliferation of generative AI is driving demand for data centers, high-performance memory, advanced packaging, semiconductor equipment, inspection tools, and specialized substrates. This is why expectations for higher earnings estimates across the semiconductor supply chain are so robust.
However, industrial growth and the intrinsic value of individual firms are distinct concepts. Current KOSDAQ semiconductor prices arguably incorporate a highly optimistic scenario: sustained order growth for several years, rising capital expenditures (CAPEX) from major clients, persistent HBM shortages, and continued investment in high-end servers.
It is the nature of stock markets to price in future expectations before they manifest in earnings. The risk arises when future estimated profits are too aggressively pulled forward into current market valuations. If growth rates fail to meet expectations, or if new orders disappoint, valuation adjustments could be both sharp and painful.
The semiconductor SAPE industry is highly sensitive to client CAPEX cycles, memory pricing, the pace of global "Big Tech" AI spending, U.S.-China semiconductor trade restrictions, and competitors' expansion plans. While the AI arms race may bolster long-term gains, the market could turn sour if signs of supply gluts emerge or if the pace of investment is moderated.
Lessons from Battery and Biotech Cycles
The KOSDAQ has experienced extreme concentration in lead sectors before. The most recent example was the secondary battery frenzy. While battery materials and equipment were the focus of a major industrial pivot toward electric vehicles, the subsequent cooling of growth, downward adjustments in demand forecasts, and the widening gap between earnings and stock prices forced the market to undergo a painful revaluation.
The same logic applies to biotech. Whenever excitement grew over technology licensing, clinical trial progress, or deals with global pharma giants, biotech stocks crowded the top of the KOSDAQ. Yet, of the seven that sat in the top 10 on January 2, only Alteogen remains.
Market attention is rarely permanent. Regardless of the industry, as growth expectations peak, investors must move past the question of "Is this a good industry?" and focus on "How much of the future is already reflected in today's price?"
Semiconductor Stocks: Focus on the Company, Not the Sector
In semiconductor investing, the most critical factor is not the grand AI/HBM narrative, but how quickly and reliably those benefits flow into a company's sales and operating profits.
Performance outcomes vary significantly based on a firm’s clients, product portfolio, role in the production process, and order structure. A client’s announcement of a large CAPEX spend does not immediately result in higher sales for an equipment supplier. Considerable time is required for equipment selection, ordering, delivery, installation, and inspection. Stocks that have moved ahead of actual orders and sales are particularly susceptible to volatility during earnings confirmation phases.
For order backlogs, the content is more important than the headline number. Investors should assess whether an order is firm or subject to cancellation, the degree of reliance on a single client, and whether the order represents a one-off project or recurring revenue. If a client alters its investment schedule or the memory market shifts, firms heavily dependent on a single customer will see their earnings outlook deteriorate rapidly.
Technical barriers to entry and client diversification are also essential metrics. Firms with proprietary technology that is difficult to replace, high production yields, and a track record of joint development with major customers exhibit greater resilience during industry downturns. Conversely, firms focused on commoditized equipment or parts prone to intense price competition may grow rapidly during booms but suffer deeper profitability declines when CAPEX slows.
The actual impact of AI and HBM must also be verified through revenue contribution. Companies directly linked to HBM inspection equipment, advanced packaging, high-spec substrates, power semiconductors, and AI server components may enjoy structural growth. However, simply being labeled an "AI-related stock" or "HBM beneficiary" is insufficient. Investors must scrutinize the share of revenue derived from these segments, whether new orders have been fully reflected, and whether the firm has achieved formal client certification and mass-production status.
In addition to revenue growth, investors must monitor operating profit margins, inventory levels, accounts receivable, and cash flow. If a company scales up in size but fails to improve profitability due to rising costs or pricing pressure, or if working capital bloats and deteriorates cash flow, it becomes difficult to justify a premium valuation.
While the transformation of the semiconductor industry by AI and HBM is indisputable, the fact that more than half of the KOSDAQ’s top 30 is now composed of semiconductor-related stocks warrants caution; it indicates a market expectation that is becoming dangerously concentrated in a single direction.
Ultimately, the winners of this semiconductor rally will not be every firm that claims to be an AI player, but rather those that can validate the current lofty expectations through tangible orders, earnings, cash flow, and sustained technological competitiveness.
