Is There a Semiconductor Stock That Surged Even More Than Samsung and SK Hynix?... Korean and Japanese Markets Set New Highs in Parallel

Nikkei Index Hits Record Highs

Semiconductor Firm Kioxia Surges Ninefold This Year, Overtakes Toyota

Concerns Rise Over Market Concentration and Increased Volatility in Both Countries

Both the Korean and Japanese stock markets are experiencing a common trend, with the robust growth of the 'semiconductor and artificial intelligence (AI)' industries driving the entire market. As global capital flows intensively into semiconductor and AI-related stocks in both countries, in anticipation of benefiting from increased AI investment, the overall stock markets of Korea and Japan are being re-evaluated.

On June 23, the Nikkei 225, the benchmark index of the Tokyo Stock Exchange, continued its record-breaking rally, closing at 72,353.96 in the previous session. During intraday trading, it reached a peak of 72,831.73. The index, which hovered between 51,000 and 52,000 in early January, has surged past 72,000 in just half a year.

The Japanese stock market is being led by key semiconductor and AI stocks. Looking at year-to-date share price gains, not only Kioxia, a NAND flash memory company, but the entire value chain has seen a remarkable surge. Kioxia Holdings, which overtook Toyota Motor Corporation to become the top company by market capitalization in Japan, has seen its share price soar more than ninefold (828.6%) this year, positioning itself at the center of the semiconductor rally.

The sharp expansion in profit-generating capability is the main factor behind Kioxia's share price surge. This is due to soaring demand for NAND flash memory, driven by increased AI data center investments from major U.S. big tech companies. According to forecasts, Kioxia’s consolidated operating profit (IFRS) for the fiscal year ending March 2027 is expected to reach approximately 7 trillion yen, eight times higher than the previous year. This figure far exceeds Toyota’s own target of 3 trillion yen, which had previously been the benchmark for the Japanese market.

Murata Manufacturing, a major competitor of Samsung Electro-Mechanics, has seen its share price rise 3.5 times (252.86%) this year, thanks to increased prices and shipments of multilayer ceramic capacitors (MLCC) for AI servers. Tokyo Electron, Japan's leading front-end semiconductor equipment manufacturer, has benefited from expanded AI semiconductor investment and has risen 2.2 times (121.7%) year-to-date. TDK, a core parts supplier for AI servers and IT devices, has gained 74.4% since the beginning of the year. Other notable gains include Disco, the world’s top manufacturer of semiconductor wafer cleaning and cutting equipment (up 76.4%), SoftBank Group, which spearheads global AI investment (up 63.4%), Advantest, a leading provider of semiconductor post-processing inspection equipment (up 54.3%), and Shin-Etsu Chemical, a key semiconductor materials company (up 53.1%). The entire semiconductor and AI sectors have recorded high growth rates.

The Korean stock market is also moving in perfect sync with Japan, as the semiconductor and AI value chain, led by Samsung Electronics and SK hynix, drives index growth. In particular, the skyrocketing share prices of Japanese companies such as Kioxia, as well as materials, components, and equipment firms, are directly benefiting the Korean memory semiconductor sector and SK hynix, resulting in increasing correlation between the two markets. In 2018, SK hynix invested about 4 trillion won in Kioxia through a Korea-U.S.-Japan joint consortium. As Kioxia’s share price rises, the value and appraisal gains of SK hynix’s indirect stake through Bain Capital and other funds are also increasing.

Mirae Asset Securities has analyzed that the adoption of agentic AI and retrieval-augmented generation (RAG) systems is sharply increasing demand for high-capacity semiconductor-based storage devices (SSDs) used in AI servers. The firm also noted that semiconductor memory companies are reducing demand cyclicality and establishing stable profit structures based on long-term supply agreements (LTAs). As a result, Mirae Asset Securities expects a comprehensive revaluation of the memory sector, including Korea's Samsung Electronics and SK hynix, as well as Japan's Kioxia. Mirae Asset Securities maintains its buy recommendations on Samsung Electronics (target price: 5.5 million won) and SK hynix (target price: 3.8 million won), while in Japan, SMBC Nikko Securities raised its target price for Kioxia from 48,000 yen to 126,000 yen on June 10.

It is also notable that both the Korean and Japanese markets are seeing warnings about excessive concentration in specific stocks. Since a significant part of both markets' rallies is premised on high growth expectations for the AI industry, any changes in the growth scenario anticipated by the market could trigger greater volatility.

Shinhan Investment & Securities researchers Hanbi Oh and Sunghwan Kim stated, "The realignment of market leaders is continuing, with Kioxia overtaking Toyota as the top company by market capitalization in Japan," adding, "The real burden on the stock market is not rate hikes themselves, but volatility that significantly deviates from market expectations." They continued, "From an investment strategy perspective, maintaining AI-leading stocks while adding certain domestic demand stocks can enhance portfolio balance and secure additional profit opportunities that may arise during the normalization of the Japanese economy."

This content was produced with the assistance of AI translation services.