[IPO Spotlight] SamCNS, Semiconductor Boom Drives Profit Surge

Ceramic STF Manufacturer for Probe Cards to List on KOSDAQ in May
Plans to Double Production Capacity with IPO Funds

[Asia Economy Reporter Hyungsoo Park] SamCNS, a manufacturer of ceramic space transformers (STF) for semiconductor probe cards, has begun raising funds for expansion. As the semiconductor supply shortage continues and the boom is expected to last until next year, SamCNS has set a plan to double its production capacity.

According to the Financial Supervisory Service's electronic disclosure system on the 14th, SamCNS will offer 12 million shares in total, consisting of 10 million newly issued shares and 2 million shares from existing shareholders. The expected public offering price range is 5,000 to 5,700 KRW, with SamCNS aiming to raise at least 50 billion KRW.

SamCNS acquired Samsung Electro-Mechanics' ceramic division in 2016 and produces probe card components for semiconductor testing. Probe cards are inspection equipment accessories that connect semiconductor chips to testing devices. Ceramic STF is one of the core components of probe cards. SamCNS supplies ceramic STF for probe cards to four domestic probe card manufacturers and one overseas manufacturer. As of the end of last year, ceramic STF for NAND probe cards, SamCNS's main product, accounted for 95% of total sales.

Last year, SamCNS recorded sales of 35.9 billion KRW, operating profit of 7.8 billion KRW, and net profit of 6 billion KRW. Sales increased by 71.3% compared to the previous year, while operating profit and net profit surged by 642.2% and 985.5%, respectively. The operating profit margin rose from 5.0% in 2019 to 21.7% last year, resulting in significant profit growth. The company expects to maintain high profitability through profit growth driven by scale expansion and efficient management of selling and administrative expenses.

After listing, SamCNS plans to use the public offering funds for large-scale facility investments. The company has been continuously expanding its production capacity since 2018. As of the end of 2020, the utilization rate was 69%. From the product development stage, SamCNS shared production capacity and other details with customers and adjusted facility utilization rates to secure appropriate production volumes and coordinate timely investment execution.

In response to increased orders from major customers, SamCNS plans to invest in a new factory to secure additional production capacity. It will invest 30 billion KRW to establish a new plant in Osong, Chungbuk, and expand production facilities. Upon completion of the expansion, ceramic STF production capacity is expected to increase from 5,000 units annually to 10,000 units.

SamCNS's bold expansion decision considered the continuous increase in semiconductor demand. Due to the COVID-19 pandemic, consumers' online activities increased, leading to higher data traffic usage in e-commerce, video streaming, and remote work. Demand for DRAM semiconductors related to servers from cloud service providers rose, as did demand for DRAM semiconductors for mobile devices driven by 5G smartphone demand. The launch of new game consoles also boosted NAND semiconductor demand. As a result, the semiconductor market and semiconductor manufacturers' facility investment scale are expected to be larger than last year.

Among the public offering funds, 9 billion KRW will be used to repay debt. SamCNS acquired Samsung Electro-Mechanics' ceramic division for 45 billion KRW in 2016. During the acquisition financing process, it borrowed 9 billion KRW from its parent company, YIK, which will be repaid using the public offering funds.

The remaining approximately 10 billion KRW will be allocated for operating funds and research and development. These funds will be used to purchase raw materials necessary for operating the new factory and to hire additional personnel. Additionally, funds will be invested in developing new products to diversify the sales structure, which is currently concentrated on a single product. SamCNS is expanding its product portfolio by pursuing new businesses such as ceramic STF for DRAM and CMOS image sensor (CIS) probe cards. The sales proportion of ceramic STF for NAND probe cards may decrease starting this year due to increased sales of ceramic STF products for DRAM probe cards.

Choi Yoo-jin, CEO of SamCNS, stated, "With the IPO as a milestone, we will launch new products such as DRAM and non-memory products and expand our business into electrostatic chucks and communication modules." He added, "With innovative technology, we will leap forward as a leading global ceramic STF company beyond Korea."

SamCNS will conduct demand forecasting for institutional investors over two days from the 3rd to the 4th of next month and finalize the public offering price. Subscription for general investors will be held from the 10th to the 11th of next month, with a plan to enter the KOSDAQ market in May. The lead underwriter is Daishin Securities.