Jusung Engineering to Spin Off Semiconductor Business, Aiming for Market Revaluation and Strategic Growth

Jusung Engineering, a a first in Korea’s chipmaking equipment industry, has announced a significant restructuring aimed at enhancing its market valuation and navigating geopolitical risks. The company will spin off its highly successful semiconductor division into a new entity, marking a strategic move to unlock greater value for its shareholders and position itself for future growth.

Chairman Hwang Chul-ju highlighted the undervaluation of Jusung despite its proprietary technologies and leading market position. By creating a new entity for its semiconductor business, Jusung aims to elevate its market cap, which currently lags behind international competitors. The new semiconductor entity, tentatively named Jusung Engineering, will operate independently, allowing it to focus solely on expanding its technological capabilities and market presence.

The spin-off comes as Jusung's semiconductor division continues to excel with its advanced film deposition technologies, including selective semi-spheric silicon deposition and atomic layer deposition (ALD). These technologies are pivotal in the production of DRAM memory, NAND flash, and logic chips. As the demand for more integrated and smaller semiconductor devices grows, Jusung's ALD equipment is set to become increasingly crucial. Additionally, Jusung’s poly etchers, applicable across various semiconductor products, will play a significant role in diversifying the company’s offerings.

Despite achieving annual sales of 200 billion won ($146 million) and holding a market cap of 1.6 trillion won, Jusung's valuation remains significantly lower than its global peers. For instance, Dutch competitor ASM boasts a market cap of 47.3 trillion won. The spin-off is expected to narrow this gap, potentially achieving comparable sales records within five years. 

The decision also aims to mitigate risks from the ongoing US-China rivalry. By separating the semiconductor business, Jusung can better shield its other divisions, including display and solar panel equipment, from potential geopolitical fallout. This strategic insulation ensures that the company’s diverse operations remain resilient in the face of international tensions.

There is speculation about Hwang Eun-seok, the chairman’s son, taking the helm of the new semiconductor entity. With a doctorate in material science and experience at Samsung Semiconductors, Eun-seok is well-prepared for leadership, though Chairman Hwang emphasizes that any succession will be merit-based.

Jusung Engineering's spin-off of its semiconductor business represents a bold move to enhance its market valuation and strategically position itself for sustained growth. By creating a focused, independent entity, Jusung aims to capitalize on its technological strengths and navigate the complexities of the global semiconductor market more effectively. This restructuring is set to unlock new opportunities and reinforce Jusung's standing as a key player in the tech industry.

Sources: Jusung, Undervalued no more: Jusung Engineering to spin off chip business (naver.com)