[Special Stock] Telechips, 80% Market Share of Vehicle Semiconductors in Hyundai Kia... Biggest Beneficiary of E-GMP

[Asia Economy Reporter Hyungsoo Park] Telechips is showing strong performance. Securities firms' analysis that the company will achieve record-high earnings this year due to increased demand for automotive semiconductors appears to have influenced its stock price.

As of 9:27 AM on the 16th, Telechips is trading at 18,500 KRW, up 7.56% from the previous day.

Jihoon Shin, a researcher at Leading Investment & Securities, explained, "The global shortage of automotive semiconductors has recently intensified," adding, "Semiconductor manufacturers have focused on producing relatively high value-added mobile and server semiconductors, reducing production of automotive semiconductors."

He continued, "Demand is rapidly increasing due to the digitalization of vehicles and the rise in electric vehicle production," and added, "It is difficult to balance supply and demand in a short time, so companies currently engaged in automotive semiconductor business will benefit."

Furthermore, he analyzed, "Telechips focuses on APs among automotive semiconductors," and "Applications include AVN, clusters (instrument panels), HUD, black boxes, etc., accounting for 96% of sales."

Researcher Shin emphasized, "About 70% of sales come from the Hyundai-Kia group," and "Telechips' APs are applied to all models except premium ones."

He explained, "The market share within Hyundai-Kia is about 80%," and "It has been confirmed that this has been rapidly improving since January."

Researcher Shin predicted, "As internal combustion engines shift to the 6th generation platform and electric vehicle models using E-GMP are launched, Telechips' performance will increase significantly," forecasting, "This year, sales will reach 138.2 billion KRW and operating profit 11.7 billion KRW, marking record-high earnings."

He added, "Most mid- to low-priced vehicles are also being released equipped with digital AVN," and "According to IHS, the global adoption rate of clusters in vehicles is expected to rise from 16.5% in 2020 to 34.1% in 2026."

When transitioning from analog to digital, new APs are required for each application. Since electric vehicles operate all applications such as AVN, clusters, and HUD digitally, the number of APs installed is increasing alongside application modularization.

Researcher Shin explained, "When multiple applications are modularized, high-performance APs are installed, leading to an increase in average selling price (ASP)," and "In future autonomous driving-related applications, NPUs will be installed, creating conditions for higher added value than existing automotive APs."

He added, "The average sales proportion of automotive semiconductors among global leading companies is about 40%," and "The price-to-earnings ratio (PER) based on expected performance this year is around 26.9 times." He emphasized, "Despite Telechips' automotive semiconductor sales proportion being 96%, its PER is undervalued at 20.4 times."