TES (KOSDAQ 095610) Stock Outlook 2026: A Leveraged Bet on Samsung and SK Hynix CAPEX

Start Here Before You Buy TES

The key to understanding TES lives outside the company. TES builds front-end chip equipment, but the rhythm of its earnings depends on when Samsung Electronics and SK Hynix decide to spend money. That is not a knock on the engineering. It means the company does not get to choose when its technology turns into revenue.

My read is simple. TES is a leveraged equipment play on the memory CAPEX cycle. When the cycle turns up, earnings multiply. When it rolls over, revenue can halve or worse. That amplitude is the personality of the stock, and if you cannot stomach it, you should not own it. But if you understand the amplitude and can read where you sit in the cycle, an equipment name will give you a far steeper return curve than the large-cap chipmakers it feeds.

Plenty of retail investors wander in thinking TES is a “safe supplier because it sells to Samsung and Hynix,” then get shocked by the drawdown in a memory downcycle. Among materials, parts, and equipment, equipment is the most cycle-sensitive layer of all. Materials get consumed as long as fabs keep running; equipment only sells when someone adds capacity. If a customer says “not this year,” that year’s tool revenue simply disappears.

So this piece walks through the business and the moat, but spends just as much time on risk and cycle timing. Before you ask whether it is a good company, you have to ask where in the cycle it stands.

👉 If you want the broader semiconductor and AI value chain first, skim the AI Stocks Investment Guide 2026.

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What Exactly Does TES Sell?

TES revenue splits into two equipment pillars, and separating them is the starting point of any analysis.

PECVD deposition is the first pillar. Chips are built by layering dozens of thin films, such as insulators and protective layers, onto a wafer. PECVD uses plasma to deposit those films evenly at relatively low temperatures. As circuits shrink and layer counts rise, deposition steps multiply. TES has a long track record supplying these deposition tools to domestic memory customers.

Gas-phase etch and cleaning is the second pillar. These tools use reactive gases to strip away unwanted film, or to remove process residue in a dry, waterless state. Unlike wet cleaning, dry processing treats delicate patterns without damaging them, which raises demand as nodes advance. TES bundles this dry etch and cleaning capability with its deposition line to widen its footprint at domestic accounts.

Put plainly, TES is a domestic memory front-end toolmaker that offers both deposition and dry processing. That positioning explains its strength and its weakness at once. The strength is a customer roster of the world’s top memory makers. The weakness is that there are, essentially, only two of them.

Pillar	What it does	Demand drivers
PECVD deposition	Lays even insulating and protective films on wafers	Node migration, 3D stacking (HBM, NAND) layer counts
Dry etch and cleaning	Strips film or removes residue with gas	Demand to avoid pattern damage, new capacity builds

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Does TES Have a Real Moat, and What Kind?

You have to be cold-eyed about moats in equipment. TES is not Applied Materials or Lam Research, dominating a process step with overwhelming technical scale. Approach it expecting that and you will be disappointed. Still, a few defensive layers matter.

First, the barrier of customer qualification. Buyers like Samsung and SK Hynix vet a new tool for yield and reliability over a long stretch before it enters a production line. Once a TES tool clears qualification on a given step, the customer rarely swaps it out, because re-qualifying a line is costly and disruptive. Simply being “already inside” is a wall newcomers struggle to climb.

Second, co-development history with domestic customers. Front-end tools are not catalog purchases; they are tuned to a customer’s specific process. TES has spent years modifying and optimizing its equipment as domestic memory lines evolved. That accumulated know-how does not copy from a blueprint.

Third, the bundle of deposition and dry processing. For a customer, having one supplier handle adjacent process tools simplifies management. It is not an ironclad lock, but it makes TES a first-look candidate on new orders.

The honest caveat is that these moats operate inside a narrow ring: domestic, memory, specific steps. Step outside that ring toward non-memory or overseas customers, and TES’s recognition and track record shrink sharply. This is a narrow, deep moat, not a wide one.

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Why Is TES So Exposed to the Cycle?

This is the most important part of the TES thesis, and it is worth hammering.

Memory is a boom-and-bust industry. When prices rise, Samsung and SK Hynix race to add capacity, and equipment orders pour out. When prices collapse, they defer investment or cut output, and new-line orders freeze. TES revenue tracks that order flow almost directly.

The problem is that the cycle sits outside TES’s control. However good the tools are, if the customer does not build a line, there is nowhere to sell. That is not a management failure; it is a structural feature of the business model.

Memory cycle phase	Samsung / SK Hynix behavior	Effect on TES
Rising prices, boom	Add leading-edge capacity, new lines	Order surge, revenue and profit leverage
Past the peak	Throttle investment pace	New orders slow, backlog stalls
Falling prices, bust	Output cuts, deferred spending	Order gaps, revenue drops sharply
Early recovery	Preemptive reinvestment	Orders rebound first, stock reacts early

On top of that sits the lumpiness of equipment names. A tool takes months from order to revenue recognition, and that revenue clusters in a few large projects. Quarterly results jump and fall in steps. To judge whether a strong quarter is a trend or a one-off, you must read it alongside the backlog and customer investment plans.

The 2022-2023 memory downcycle, which badly dented domestic front-end suppliers’ earnings, illustrated the structure well. When HBM and DDR5 investment revived, the same names recovered fast. Large amplitude means a deep downside, but also a steep upside.

👉 For how capital-gains treatment shapes cyclical positions, the loss-harvesting principles in the overseas stock capital gains tax guide apply broadly.

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How Do HBM and Leading-Edge Migration Help TES?

The bull case lives here. Memory investment has been shifting from plain capacity expansion toward leading-edge, high-value nodes.

HBM stacks DRAM dies vertically. Stacking layers means more deposition, etch, and cleaning steps per wafer, which feeds straight into front-end tool demand. Processing the same single wafer now requires more process equipment. For a company doing both deposition and dry processing, that is a structural tailwind.

The DDR5 generation shift and rising NAND layer counts pull in the same direction. As processes get finer and more complex, step counts climb and tool demand per step climbs with them. It goes beyond “how many more lines get built” to “each line now needs more equipment.”

Two caveats, though. First, how much of that spillover reaches TES is a share question. Even if the pie grows, if Wonik IPS, Jusung, Eugene Technology, or the global majors take more, TES’s slice may not grow as much as hoped. Second, HBM investment ultimately rests on the customer’s call. The theme is friendly, but until it shows up as actual orders, it is only expectation.

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Where Does TES Sit Against Domestic Peers and Global Giants?

Viewing TES alone makes it hard to judge. Line it up against its ring-mates and the position becomes clear.

Company	Core focus	Scale and traits	Customer base
TES (095610)	PECVD deposition, dry etch and cleaning	Step-concentrated, large earnings swings	Samsung and SK Hynix heavy
Wonik IPS	Broad front-end deposition and etch	Large domestic toolmaker, wide range	Domestic memory centric
Jusung Engineering	ALD deposition and more	Owns core deposition IP	Memory and display
Eugene Technology	LPCVD and ALD deposition	Deposition specialist	Domestic memory centric
AMAT / Lam (US)	Deposition and etch broadly	Overwhelming global scale and technology	Every customer worldwide

Two things surface. One, TES overlaps heavily with domestic peers in deposition and etch, and since they chase the same handful of memory buyers, they naturally compete for the same orders. Two, on the global stage the scale and breadth gap versus AMAT and Lam is large. TES’s game is not a head-on fight with them; it is holding and widening its place on specific process steps at domestic accounts.

A newer variable is the rise of Chinese toolmakers. China is pushing hard to localize its chip equipment, and the competitiveness of low-cost tools in deposition and etch is improving. They are not yet at the level to displace domestic suppliers at the leading edge, but they can pressure pricing from commodity and trailing nodes upward, which belongs on the medium-term risk list.

👉 To view TES alongside other materials names in the chip chain, this batch’s Cosmo Chemical (005420) outlook is worth a look.

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TES Investment Risks: A Reality Check on the Bull Case

The more appealing the bull story, the colder the risk list needs to be.

Customer concentration. The core problem. Revenue effectively rides on two buyers. When their cycles overlap, earnings explode; when they freeze together, sales empty out. It also weakens pricing power. If a customer demands a price cut, refusing is hard.

Cycle and order volatility. As stressed, quarterly results move in steps. Mistake one strong quarter for a trend and you can get trapped at the peak. Mistake one weak quarter for structural decline and you can sell at the trough. It is a name where the headline number alone leads you astray.

Chinese competition. Localization in China can shake pricing from commodity nodes upward. The leading edge still has room, but this is not a zone to ignore.

Share-defense burden. Because it fights domestic peers for the same orders, losing a step means TES’s slice shrinks even as the pie grows. There is no guarantee the HBM spillover lands at TES.

Cyclical valuation trap. Equipment names look expensive at the bottom, where earnings collapse and the P/E rises, and cheap at the top, where earnings surge and the P/E falls. A low P/E may be a peak signal, not a bargain. Cyclical valuations often have to be read in reverse.

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Three Practical Scenarios for International Investors

TES is a KOSDAQ-listed Korean stock, so its tax and currency mechanics differ from a US name. Here is how a foreign investor might frame it.

Scenario 1: Contrarian Accumulation at the Cycle Trough

Equipment names like TES are often best entered when the industry looks worst. You accumulate in tranches while output cuts and deferred spending leave earnings at a bottom and the headlines are grim, then trim into the early recovery as HBM and leading-edge investment restarts. For a US-based investor, gains on a foreign stock are taxed as ordinary capital gains (short- vs long-term), and any Korean dividend is subject to withholding at source, which may be partly recoverable via the foreign tax credit. The bigger variable, though, is the won-dollar rate: a weakening won can erode a dollar-based investor’s return even when the stock rises. Since timing the trough is genuinely hard, buy in pieces rather than all at once.

Scenario 2: A Small Core-Satellite Position for the Long Haul

If you cannot time the cycle, hold TES as a satellite. Fill the core with large-cap quality or broad index exposure, and use TES as a small satellite betting on the upside of the semiconductor cycle. A small weight makes the deep downcycle drawdowns easier to sit through, and when the cycle turns the satellite contributes more steeply than the core. Just remember that currency risk runs both ways on a foreign holding, so size the position with the FX swing in mind, not only the business.

Scenario 3: Confirmation-Based Entry After Orders Land

If contrarian buying feels uncomfortable, do the opposite and enter on confirmation. Wait for the company’s order disclosures or an explicit capacity-expansion announcement from Samsung or SK Hynix, confirm the trend, then step in. You pay more than the trough, but the earnings rebound is already visible in the numbers, so the rationale is concrete. Just keep the currency layer in view: for a foreign investor the return is the stock move plus or minus the won’s path, and both need to break your way.

All three share one premise. TES earnings are set by its customers. So before buying, check where the customers are pointing their capital.

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The Metrics to Watch Every Quarter

If you own or track TES, prioritize these four in the quarterly results and news. They tell you more about the next six to twelve months than the headline revenue or profit does.

First: front-end CAPEX direction. Whether the whole memory industry’s capital spending is expanding or contracting is the starting point for everything. The direction of the front-end tool market is the direction of the water TES swims in.

Second: order backlog. How much booked business is stacked up is the most direct leading indicator of future revenue. Weak sales with a rising backlog is a recovery signal; strong sales with an emptying backlog is a warning.

Third: Samsung and SK Hynix investment plans. The CAPEX direction and any HBM or leading-edge capacity commentary in the two customers’ results and guidance is, in effect, the source of TES revenue.

Fourth: share in PECVD and dry etch. The question is whether TES holds its slice as the pie grows. Watch whether it is ceding ground to peers on new process steps, and whether adoption continues at specific customer lines. If share slips, TES can be left behind even in a good cycle.

Metric	Why it matters	Warning sign
Front-end CAPEX direction	The whole industry’s current	Industry-wide cuts, spreading output reductions
Order backlog	Leads revenue	Shrinking backlog, gap in new orders
Samsung / SK Hynix plans	Source of revenue	Deferred spending, conservative guidance
PECVD and etch share	Slice of the pie	Peers winning adoption on new lines

Read the four together and you can judge where you sit in the cycle instead of getting whipsawed by a single quarter. With a name like TES, that is the skill that matters most.

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Further Reading

• 👉 AI Stocks Investment Guide 2026: Picking Core Names and ETFs
• 👉 Overseas Stock Capital Gains Tax Guide: Loss Management and Tax Planning
• 👉 Cosmo Chemical (005420) Stock Outlook 2026: TiO2 Cash Cow and Battery Material Optionality
• 👉 SCHD Dividend ETF Guide 2026: Balancing Cyclicals and Income

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This article is an investment opinion written for informational purposes and does not recommend buying or selling any specific security. Stock investing carries the risk of principal loss, and investment decisions should be made by you, taking your own financial situation and risk tolerance into account. Any description of a company’s business or outlook reflects the time of writing; always verify the latest disclosures and consult a professional before investing.