Jusung Engineering Posts Stellar Q2 Recovery with 207% Sales Surge, Driven by Semiconductor Market Rebound

Jusung Engineering reported a robust financial recovery in the second quarter of 2024, with sales soaring by 207% to 97.3 billion won ($72.0 million) compared to the same period last year, and an operating profit margin of 37%. This turnaround follows a challenging first quarter and is driven by increased orders and deliveries of semiconductor equipment, including a significant contract with SK Hynix for DRAM manufacturing in China. The company's expertise in Atomic Layer Deposition (ALD) technology and its expansion into OLED and solar power sectors position it well for continued growth as the semiconductor market rebounds.

Sources:

Jusung Engineering Reports Robust Q2 Results with 207% Sales Growth - Businesskorea

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)

Korea’s Jusung Engineering set to supply non-memory chip gears overseas

South Korean chip equipment manufacturer Jusung Engineering Co. is set to supply atomic layer deposition (ALD) equipment to a leading global chip manufacturer for system chips at a U.S. integrated device manufacturer and a major foundry in Taiwan, according to its Chairman and Chief Executive Officer Hwang Chul-joo.

“The test conducted by our global customer on the Guidance Series, an ALD equipment developed for the first time in the world in 2020, has been completed and we expect the purchase order to come in the first half of this year,” Hwang told Maeil Business Newspaper.

In general, it takes two to three years for a chip equipment to be verified and applied to mass production after development. Jusung Engineering, which has been engaged in the joint development of an ALD equipment with a global non-memory chip manufacturer since 2015, has carried out tests with multiple clients from 2020.

Jusung Engineering until now had been focused on the manufacturing deposition equipment that coats necessary substances to wafers as part of a chip manufacturing process.

Full Story: Korea’s Jusung Engineering set to supply non-memory chip gears overseas - 매일경제 영문뉴스 펄스(Pulse) (pulsenews.co.kr)

South Korean equipment makers recorded mixed results in the first quarter of 2021

출처 : THE ELEC, Korea Electronics Industry Media(http://thelec.net) - South Korean equipment makers recorded mixed results in the first quarter of 2021.

• Fab equipment vendors posted high growth, while display equipment firms underperformed.
• Fab equipment makers benefited from aggressive spending by semiconductor companies.
• CVD/ALD equipment companies showed good growth, see below (Jusung, Wonik IPD, Eugene Technologies

Semes, Samsung Electronics’ fab equipment subsidiary, recorded 870.6 billion won in sales, an increase of 62.3% from a year prior. It recorded 112.8 billion won in operating income, an increase of 40.5% over the same time period. The growth likely stems from Samsung starting to put in equipment to its P2 chip line at its Pyeontaek plant during the quarter. Overheat transport accounted for 60% of the sales recorded by Semes during the quarter.

SFA recorded 355.6 billion won in sales and 42.3 billion won in operating income, a drop of 3.3% and 1.6%, respectively, a year prior. Non-display business accounted for 65.1% of its sales. SFA, which previously focused on display kits, managed to record level earnings to a year prior thanks to other business areas.

Wonik IPS recorded 254.5 billion won in revenue and 24.2 billion won in operating income, a surge of 39.9% and 68.1%, respectively, from a year prior. The firm previously focused on fab equipment for use in memory chip production. But it has begun supplying kits for foundry beginning last year, which helped growth.

Eugene Technology recorded 100.7 billion won in revenue and 30.7 billion won in operating income. The company recorded an operating margin rate of 30.5%. Its LPCVD equipment supplied to SK Hynix for the latter’s M16 DRAM fab led the growth.

Jusung Engineering posted 75.3 billion won in sales in the quarter, double that of the year prior. It turned a profit from a year prior and posted 16 billion won in operating income. The company won the order for atomic layer deposition kits from SK Hynix for use in next-generation DRAMs. Jusung is the sole supplier of the kits.

Hanmi Semiconductor recorded 70.9 billion won in sales, a jump of 79% from a year prior. Its operating income increased 160% year-on-year to 19.3 billion won. It won 22 orders during the quarter. It has signed supply deals with SK Hynix, Amkor Technology Korea, ASE, NXP, Nanya, SPIL and others for a combined worth of 87 billion won.

YIK recorded 67.5 billion won in sales and 9.7 billion won in operating income, a jump of 99.7% and 177.1%, respectively, from a year prior. The firm mainly provides electrical die sorting equipment. The firm is seeing more orders from Samsung, having signed a 155.3 billion won deal with the tech giant in the first quarter alone.

South Korean fab equipment makers are expected to post solid growth throughout 2021 from increased spending this year by Samsung and SK Hynix. SK Hynix had said in the conference call for the first quarter that it plans to execute some of its spending it planned for 2022 earlier to this year.

SEMI is expecting global fab equipment spending to increase 15.5% this year to US$70 billion. Meanwhile, South Korean display equipment makers underperformed during the first quarter.

Samsung Display and LG Display have been conservative with their spending due to uncertainties surrounding the display market. But increased spending in OLED from Chinese panel makers such as BOE and Tianma staved off a huge dip in profitability.

Only few companies recorded growth, such as AP Systems, which saw sales drop 6.9% year-on-year but operating income surge 53.2% over the same time period. The company benefited from laser annealing equipment supplied to BOE for the B12 line.

Youngwoo DSP saw a surge in its operating income from supplies to its Chinese customers. KC Tech saw sales jump 21.1% but operating income remained flat. Top Engineering saw 9.6 billion won in operating loss from the 6.1 billion won operating loss posted by subsidiary Powerlogics. Dong A Eltek recorded 2.3 billion won in operating loss, though sales doubled. The firm said increased cost from the pandemic stunted growth.

Charm Engineering continued to record loss. HB Technology, Toptec and Philoptics all turned to the red. 

Local display equipment makers are expected to see a turnaround starting in the fourth quarter when Samsung Display and LG Display decide on new spending plans around the same time.

Jusung to spend 36.3 billion won to build new production facility

Fab ALD and CVD equipment firm Jusung Engineering will spend 36.3 billion won to build a new production facility in Gwangju, where the company is based, it said on Thursday. In addition, it is reported that Jusung recently sold SK Hynix 30 ALD systems.

Source: Jusung to spend 36.3 billion won to build new production facility

www.thelec.net/news/articleView.html?idxno=2731

Applied Materials will regain its No. 1 ranking in the semiconductor equipment market in 2020 from ASML

According to recent published data by The Information Network (Seeking Alpha LINK), Applied Materials will regain its top ranking in the semiconductor equipment market in 2020 from ASML. Fab equipment spend in 2020 was enhanced from pull-ins of sales into China and Taiwan, with 3Q QoQ increases of 22.5% and 36.2%, respectively.

As is well known ASML and Applied Materials does not compete in their  business segments, Lithography (ASML) resp. Deposition & Etch (Applied Materials). Applied Materials has a number 1 spot in PVD, CVD, Epi, CMP and Implant/Doping. However, business segments where Applied Materials so far has not been successful to reach a top 3 position in the past years include:

• Atomic Layer Deposition
• MOCVD
• Furnace 
• Dielectric Etch  
• Spray Processing
• Dielectric Etch (including ALE)
• Wet Stations

As is known, Applied Materials have several times made very serious attempts to enter the ALD segment, but failed several times to compete with ASMI, Tokyo Electron and the South Korean OEMs (Jusung Engineering, Wonik IPS and Eugene Technology. In 2019 Applied Materials announced that it will acquire Japanese Kokusai (LINK) but the final agreement is yet not settled. If successful Applied will have an opportunity to kill 2 birds with one stone:

1. Move in to top 3 spot in ALD

2. Take number 2 spot in Furnace business

Table based on information and own assumptions in the article (Seeking Alpha LINK)

ASMI lost ALD market share 2016 to Jusung and Applied Materials

According to Gartner the semiconductor equipment market grew 12% in 2016. They have seen aggressive capital spending for NAND flash facilities that "propelled the Material Removal/Clean and RTP and Oxidation Diffusion segments to deliver more than 20% annual growth" (Gartner).

The market for Atomic Layer Deposition (ALD) contracted less sharply in 2016 than anticipated, but ASMI, however, lost more market share than expected. This was concluded by an analysts at Morgan Stanley based on figures from Gartner.

Stock market analysts watching ASM International N.V. (NASDAQ:ASMI) have recently changed their ratings on the stock following the release of the Gartner recently released report on Wafer Equipment companies. Apparently ASMI has lost considerable market shares in ALD to Jusung Engineering and Applied Materials in 2016. The two ALD batch companies Tokyo Electron and Kokusai were stabel in their ALD segment (Please note that TEL does not split their ALD business into Single/Multi wafer and Batch anymore). Also Lam Research lost market share in ALD according to reports.

The ASMI market share in ALD was 64% and is now down to 54% (remark: Gartner does not include Hitachi Kokusai, PV passivation, AMOLED Encapsulation and the smaller ALD players on the market) while the wafer based ALD market only dropped 3% (Source in Dutch: Morgan Stanley benieuwd naar uitkomst belang in ASM PT)

My take on this is that the 300 mm wafer fabricators are moving to Spatial ALD technology for multipatterning due to Cost of Ownership. I can only see it as the ASM XP8 with its 8 chambers (4 twin chambers) must have lower productivity than the multiwafer Spatial ALD tools (Jusung SPD, TEL NT333, AMAT Olympia). Also Lam Research 2x4 station platform does not seem to compete with Jusung 2x5, Applied Olymipa and TEL NT333 2x6 Wafers, which reportedly is taking market shares in low temperature SiO2 for multipatterning.

Jusung was one of the early starters for SADP at Qimonda with their Spatial Cyclone+ tool running low temperature SiO2 ALD 2006 to 2009 and therefore have 10+ years of experience for this technology so that may explain their fast growth now.

ASMI had a recent call with investors (Q4 2016 Earnings Call, March 3, 2017) and here is an outlook given on the ALD single wafer market, which should recover and continue to grow in 2017 :

"After strong growth in the 2013 to 2015 period, the single-wafer ALD market went through a double-digit contraction in 2016. Weakness in memory was only partially offset by strong growth in the Logic/Foundry segment. In 2017, we expect condition to improve and the ALD market to show a clear recovery compared to last year. Longer term, we continue to expect healthy growth for ALD. We forecast the single-wafer ALD market to reach a size of $1.5 billion by the 2020-2021 timeframe. We earlier expected the market to reach the $1.5 billion level by 2019. Our updated view is mainly explained by lower expectations for the DRAM segment. Still, our updated forecast implies a solid double-digit growth path for the coming years." 

 - Chuck del Prado 

At the end of the day the ASMI Stock continue its steady high growth path going on now for more than 6 months so things are looking good for ALD and ASMI and its competitors in 2017.