'Unisem' Smiles Amid the ESG Management Boom

Increase in Sales of Scrubber Equipment Reducing Harmful Gases

[Asia Economy Reporter Hyunseok Yoo] Unisem, a semiconductor and display equipment company, has forecasted strong performance this year. The improvement in earnings continues due to facility investments by semiconductor companies, and benefits from the activation of ESG (Environmental, Social, and Governance) management are also expected.

Unisem was established in 1988. It operates in the manufacturing of semiconductor production machinery and is headquartered in Dongtan-myeon, Hwaseong-si, Gyeonggi-do. The company entered the KOSDAQ market in 1999. It produces scrubbers and chillers. Scrubbers remove harmful gases generated during semiconductor or display processes. Chillers stabilize the temperature around chambers or wafers, improving process efficiency.

Performance varies by year. Sales and operating profit, which were KRW 214.3 billion and KRW 26.1 billion in 2018, decreased to KRW 179.0 billion and KRW 24.0 billion in 2019. However, last year, they rebounded to KRW 215.1 billion and KRW 32.2 billion. In the first half of this year, sales and operating profit reached KRW 163.8 billion and KRW 28.4 billion, up 43.68% and 46.68% respectively compared to the same period last year. By product, chillers account for the largest share at 38.51% of total sales, followed by scrubbers at 33.51%, and maintenance at 26.33%.

The order backlog also increased compared to last year. As of the first half of this year, the total order amount was KRW 197.3 billion, with an order backlog of KRW 33.6 billion excluding already delivered products. In the first half of last year, the total order amount was KRW 130.7 billion, and the backlog was KRW 20.0 billion.

The cause of performance improvement is the activation of non-face-to-face lifestyles. Since last year, the COVID-19 pandemic has expanded non-face-to-face economic activities such as telecommuting and online lectures across society. This led to increased demand for data and consequently increased demand for memory semiconductors. As a result, major customers increased facility investments, boosting equipment sales. In particular, demand for scrubbers used in etching processes increased due to investments in non-memory foundries in the upstream industry.

Unisem's major customers are Samsung Electronics and SK Hynix. In the domestic market, scrubbers and chillers hold market shares of 50% and 40%, respectively. Samsung Electronics accounts for about 45% of total sales. The high share of Unisem's products is due to their performance. For example, scrubbers require internal filter replacement after a certain period. Although this varies by product, Unisem's products are used longer and have longer filter replacement intervals compared to competitors, indicating superior efficiency.

This year's performance is expected to grow compared to last year. According to FnGuide, a financial information company, securities firms forecast this year's sales and operating profit at KRW 285.7 billion and KRW 50.0 billion, up 32.81% and 55.12% respectively from the previous year. Youngmin Ko, a researcher at Shinhan Financial Investment, explained, "Quarterly performance is expected to show a high first half and a low second half trend. The reason is a decrease in domestic customer investments in the second half, but overseas semiconductor and display customer investments are scheduled, which is expected to mitigate the sales decline."

Unisem's performance growth is likely to continue next year. The 2022 sales and operating profit forecasts are KRW 328.9 billion and KRW 61.8 billion. Samsung Electronics announced in May that it will build a foundry plant in the U.S. worth KRW 20 trillion. The securities industry expects Unisem's equipment to be supplied to Samsung's U.S. plant.

Another reason is the recent strengthening of ESG management by companies. Among Unisem's equipment, scrubbers play a role in reducing harmful gases, and benefits are expected in the future. Researcher Youngmin Ko said, "Following recent ESG trends, semiconductor manufacturers are considering adopting scrubbers in wet etching processes. Tests for additional customers beyond those currently supplied by Unisem are underway."

Unisem also emphasized that benefits from strengthened ESG activities are appearing. Among its equipment, plasma-type scrubbers are considered eco-friendly. Additionally, since Unisem's equipment is used in all fields including non-memory and memory, steady product sales are expected due to customer facility investments.

A Unisem official stated, "Scrubbers are used in both memory and non-memory fields in semiconductor processes, so supply is expected to continue expanding along with major customers' investment increases. Also, following recent ESG management trends, customers are actively expanding the use of scrubbers to suppress harmful gas emissions."