AI Infrastructure Speed Race Lifts South Korean Telecom Equipment Stocks

Korea Economic Daily

Summary

RFHIC, OE Solutions, Solid, LIG AcuB and Seojin System, among other AI telecom equipment stocks, have posted gains of nearly 100%% or more this year.
Brokerages said demand for AI infrastructure that minimizes latency will increase as the AI industry shifts from training to inference, raising the importance of AI-RAN.
Kiwoom Securities named Solid and Nota as its top picks and identified RFHIC and LIG AcuB as stocks to watch, saying investors should focus on AI infrastructure-related stocks with improving earnings over the next five years.

Forecast Trend Report by Period

AI telecom equipment stocks in South Korea are quietly extending gains. As the era of real-time inference takes hold, investors are turning to companies that can support the underlying infrastructure.

According to the Korea Exchange on April 28, RFHIC has surged about 150% this year. The company develops and produces gallium nitride, or GaN, semiconductors used in wireless communications and defense. Expectations for improved earnings this year have fueled the rally. OE Solutions, which makes optical transceivers, a key component in optical communications, has climbed 146.08% this year. Solid, the country’s largest optical repeater specialist, has jumped 103.71%, while wireless communications test-equipment maker LIG Nex1 Acub and telecom equipment and semiconductor component producer Seojin System have risen 97.36% and 99.61%, respectively.

Brokerages say demand for AI infrastructure that minimizes latency will grow as the industry’s center of gravity shifts from training to inference. Fast processing speeds are essential for applying AI in real time to autonomous driving and robotics. That, in turn, is raising the importance of AI-RAN, or artificial intelligence radio access networks.

Kiwoom Securities named Solid and Nota as its top picks. It also listed RFHIC and LIG AcuB among stocks to watch. Solid stands to benefit from expansion in the open radio access network, or O-RAN, market. Nota has signed a software supply agreement with British semiconductor company Arm. RFHIC and LIG AcuB are also poised to deliver strong results on robust demand from both telecom equipment and defense businesses.

"Over the next five years, interest in AI infrastructure-related stocks is likely to continue, so investors should pay close attention to companies with improving earnings," Kim Hak-jun, an analyst at Kiwoom Securities, said.

Jo A-ra, Hankyung.com reporter rrang123@hankyung.com