View of Samsung Electronics Pyeongtaek Campus. /Courtesy of Samsung Electronics

Samsung Electronics and SK hynix are expected to begin facility investments to expand DRAM production capacity in the second half of the year. As the DRAM market enters a recovery phase, this is analyzed as a means to increase the pace of DRAM supply while securing production capacity for DRAM that will be used in the 6th generation high-bandwidth memory (HBM4). Suppliers of semiconductor equipment, such as Wonik IPS, Eugene Technology, PSK, and Jusung Engineering, are expected to benefit.

According to industry sources on the 26th, Samsung Electronics plans to invest in facilities to establish a minimum monthly production capacity of 60,000 wafers at its Pyeongtaek Campus Plant 4 (P4) in the second half of this year. SK hynix plans to initiate facility investments to build a production capacity of around 90,000 wafers per month at its new Cheongju M15X plant around November. Unlike the focus on advanced process conversion investments during the recent recession in the DRAM market, new facility investments are expected to expand supply in the domestic semiconductor equipment industry.

◇ Samsung Electronics focuses on 1c, SK hynix on 1b DRAM facility investments

In the second half of the year, Samsung Electronics is expected to focus on the 10-nanometer 6th generation (1c) DRAM, while SK hynix is set to concentrate on the mass production of the 10-nanometer 5th generation (1b) DRAM. This is interpreted as a strategy considering the HBM4 market, which will be a key product next year. Samsung Electronics plans to use 1c DRAM for HBM4 12-layer products, while SK hynix will utilize 1b DRAM. Notably, Samsung Electronics, which has ceded the HBM market to SK hynix, is determined to improve the yield and performance of 1c DRAM.

The recovery trend in the DRAM market also seems to have influenced this facility investment. As the IT demand slump continued until last year, memory semiconductor corporations focused their investments on converting existing legacy processes to advanced processes rather than large-scale facility investments, while also prioritizing securing packaging facilities for HBM manufacturing, where demand had significantly increased compared to general-purpose DRAM. However, this transition led to a worsening supply shortage, which accelerated the depletion of client inventory and thus expanded demand.

Lee Dong-joo, a researcher at SK Securities, noted, "Advanced products still face supply shortages as the DRAM market enters a boom phase," and added, "It is expected to bring positive effects across the semiconductor ecosystem."

◇ Expected benefits for front-end equipment companies like Wonik IPS, Eugene Technology, and PSK

For this reason, unlike in the past when benefits were concentrated among back-end semiconductor equipment companies engaged in HBM packaging, front-end companies are also expected to ramp up their equipment supply. The front-end process refers to the stages of wafer fabrication and circuit formation, while the back-end process involves testing and packaging the chips. The front-end mainly handles tasks such as engraving circuits onto wafers (oxidation, photolithography, etching, deposition, etc.), while the back-end is responsible for cutting chips and packaging them for external connections.

Providers of front-end equipment, including Wonik IPS, Eugene Technology, PSK, and Jusung Engineering, who count Samsung Electronics and SK hynix as their main clients, plan to increase supply. These corporations relied on Samsung Electronics and SK hynix for over 50% of their sales last year. Wonik IPS and Eugene Technology supply deposition equipment that applies desired materials in thin film form to semiconductor wafers, thereby imparting electrical properties. PSK provides equipment that removes photoresist used in the lithography process for drawing circuits on wafers.

According to financial information provider FnGuide, the operating profit forecasts for Wonik IPS and Eugene Technology are projected to rise significantly to 74.2 billion won and 78.7 billion won, respectively, which represents an increase of approximately 600% and 25% compared to the previous year. The operating profit forecasts for PSK and Jusung Engineering are also expected to increase by approximately 5% and 12%, respectively, to 86.2 billion won and 109.1 billion won.