New IT Paradigm Begins... Focus on ESG and DDR5 [Siljeon Jaetech]

[Asia Economy Reporter Lee Seon-ae] The securities industry has identified 'ESG (Environmental, Social, and Governance)' and 'DDR5 (Double Data Rate 5)' as key trends to watch in the IT (Information Technology) sector in 2022.

A new wave is emerging with the activation of ESG policies. Various government policies such as greenhouse gas reduction and long-term low-carbon development strategies are being introduced. Accordingly, the IT industry is inevitably facing a trend where the importance of ESG is highlighted due to issues related to hazardous substance management. Kangho Oh, Senior Researcher at Shinhan Financial Investment, predicted, "With the expansion of corporate ESG participation and the activation of related funds, eco-friendly IT companies leading paradigm shifts will attract attention."

Due to the characteristics of Korean industry, investments in facilities such as semiconductors and chemicals have developed. Perfluorocarbons (PFCs), a type of greenhouse gas, mainly occur in semiconductor manufacturing, while sulfur hexafluoride (SF6) is primarily generated in display and transformer insulators. Major domestic companies are making proactive investments as fast followers to address environmental issues. Companies to watch include Ecopro HN, GST, and Komico. Researcher Oh explained, "Ecopro HN is a producer of materials and equipment related to environmental pollution prevention, and its performance growth is expected from fine dust reduction solutions," adding, "GST manufactures semiconductor and display process gas treatment (scrubber) and temperature control (chiller) equipment, establishing itself as an essential product for reducing hazardous substances in client processes and improving energy efficiency in an environment where ESG importance is emphasized."

Komico is responsible for cleaning and coating parts for semiconductor and display clients. It handles hundreds to thousands of parts used in etching, diffusion, and ion implantation processes. The core of its strong performance is the increase in client operation rates. Regarding Komico, he said, "The demand for advanced coating technology due to the introduction of fine processes and the expansion of overseas client volumes are growth factors," and added, "In the cleaning sector, the share of dry cleaning, which does not use chemicals, is expanding, aligning with ESG trends."

The DDR5 era will also officially begin next year. DDR5 is the next-generation DRAM standard. The key focus for DDR5 in 2022 is the expansion of product adoption. Starting with PCs in the fourth quarter of 2021, it is expected to expand to servers in 2022. Intel's Alder Lake is set to be unveiled soon. The introduction of new CPUs is a factor that could expand DDR5 adoption, and the accelerated release of new products (such as Zen4, Sapphire Rapids) is expected to bring a new wave to the memory market.

Wonyong Shim, a researcher at Shinhan Financial Investment, emphasized, "The biggest beneficiaries of the paradigm shift due to new product launches are domestic back-end equipment and consumables companies. Especially in back-end processes, the transition to DDR5 involves significant changes in process (Recipe), equipment, and components due to changes in data transfer speed and operating voltage," adding, "The performance improvement of related companies is likely to trend upward starting from the first half of 2022."

Items expected to benefit from the disclosed process changes include memory modules, back-end processes, sockets, and passive components. Related companies include Simtek, TLB, Samsung SDI, UniTest, and Ligno Industry.