[Click eStock] "'DDR5' Big Cycle Begins... Top Beneficiary Simtek"

[Asia Economy Reporter Ji Yeon-jin] Shinhan Financial Investment announced on the 24th that the next-generation PC memory 'DDR5' big cycle will begin in the second half of this year, and raised the target price of Simtek to 30,000 KRW.

Simtek recorded sales of 278.6 billion KRW in the fourth quarter of last year, down 5% year-on-year, and operating profit surged 50% to 14.8 billion KRW. Although the results were below market expectations, considering that about 10 billion KRW of performance bonuses were included, excluding this, the performance is analyzed as not bad.

Simtek recently announced a new investment plan. The investment scale is 40 billion KRW, aimed at expanding capacity for MSAP (Microcircuit Process) packaging substrates such as SiP. This investment is expected to expand production capacity to achieve annual sales of 100 billion KRW in the future.

Operating profit for the first quarter of this year is estimated to increase 11% year-on-year to 15.1 billion KRW. The estimate was revised downward from the previous forecast (20.4 billion KRW) due to the decline in the KRW-USD exchange rate. However, inventory adjustments for server-oriented memory semiconductor substrates are expected to conclude by the end of the first quarter, and the annual performance for this year is projected at sales of 1.2 trillion KRW (+1%) and operating profit of 104.5 billion KRW (+16%).

Sales are expected to show slight growth due to the exchange rate decline compared to the previous year and the contribution of module PCB. However, as the sales proportion of high value-added substrates (FCCSP,

SiP) increases, an increase in blended average selling price (Blended ASP) and improvement in operating profit margin are anticipated. Hyungwoo Park, Senior Researcher at Shinhan Financial Investment, said, "Next year, sales growth centered on DDR5 and SiP is expected to accelerate," and added, "Following non-memory, a boom in memory packaging substrates is expected, and the biggest beneficiary is Simtek." Simtek's memory substrate sales account for about 90%, and the ripple effect of memory platform upgrades (DDR5, GDDR6, LPDDR5) is expected to expand this year.