LS SECURITIES predicted on the 5th that the growth of the RFHIC defense institutional sector would continue. It did not provide an investment recommendation or target price.
RFHIC was established in 1999. It designs gallium nitride (GaN) transistors and power amplifiers. In the communications sector, Samsung Electronics is a key customer, while in the defense institutional sector, LIG Nex1 is a major client. It is also actively exporting directly to global defense corporations such as Raytheon in the U.S., Leonardo in Italy, and Saab in Sweden.
Choi Jeong-hwan, a researcher at LS SECURITIES, forecasted that RFHIC's performance would improve, focusing on its defense institutional sector. He noted, "RFHIC has experienced prolonged poor performance following the U.S. ban on Huawei communications components due to the trade conflict between the U.S. and China, as well as Korea's 5G deployment. However, last year, the defense institutional sector accounted for 50% of sales, and the operating profit is estimated to have a high margin rate like other defense corporations."
He further stated, "Amid a global boom in the defense industry, RFHIC's defense institutional sector order backlog will continue to grow," adding that "the proportion of exports is expected to increase."
Researcher Choi evaluated that RFHIC has the design capability for power amplifiers optimized for airborne, maritime, and ground weapon system radars. The ability to customize designs according to the requirements of front-line companies is a positive factor.
Researcher Choi said, "High-frequency signal processing will be at the center of defense industry development, and thus demand for GaN-based power amplifiers suitable for high-voltage, high-frequency environments will continue to increase."
However, given the nature of the defense industry, stable raw material supply is essential. He pointed out that RFHIC's reliance on overseas sources for GaN wafer supply and foundry services is a drawback. RFHIC explained to researcher Choi that it will strive to diversify its wafer supply sources and foundry services.