[Click eStock] NepesArc, a Beneficiary Company of High Growth in System Semiconductors

[Asia Economy Reporter Lee Seon-ae] IBK Investment & Securities evaluated Nepes Arc on the 23rd as a beneficiary company of the high growth in system semiconductors. No investment opinion or target price was provided.

Nepes Arc, a company newly established in April 2019 through the physical division of the test business division within Nepes Semiconductor Business Unit, was listed in November 2020. Based on this year's expected sales, the sales proportion by product is divided into PMIC 43%, DDI 35%, AP 15%, RFIC 3%, and others 4%. In the post-process (OSAT) stage,

the parent company Nepes is responsible for WLP and Back-ended Assembly, while the company handles Probe Test and Package Test in an outsourced form. Nepes has secured customers such as Samsung Electronics and NXP based on next-generation package technologies including WLP, FOWLP, PLP, and SiP, and has signed Turn Key contracts for Package & Test volumes.

The FO-PLP next-generation package equipment for U.S. customers started operation in March, producing small quantities, and plans to begin full-scale mass production from the end of the year with a monthly output of 3k (equivalent to 15k in 12” wafers). The company currently only tests PMIC but expects to expand its product range in the future.

The operating profit margin in the third quarter recorded 26.5% (up 1.4%pt QoQ) despite partial reflection of FO-PLP depreciation expenses, and is expected to maintain a similar level in the fourth quarter.

Minhee Lee, a researcher at IBK Investment & Securities, emphasized, "Following a 68% sales increase this year, a 52% growth is expected next year, based on the recently announced 99.5 billion KRW equipment investment (expansion in line with next year's customer demand) and the contribution of new business FO-PLP test sales," adding, "Despite the burden of increased fixed costs, next year's operating profit margin is expected to be 28.5% (up 3.7%pt YoY), and EBITDA is forecasted at 108.6 billion KRW."