DB HiTek, Selling Its Specialty 8-Inch Semiconductor 'Hanumul'

Benefits from Prolonged Semiconductor Shortage
8-Inch Wafer Profits Surge
Annual Sales Expected to Reach 1.7 Trillion Won
New Business Focuses on Power Semiconductors

[Asia Economy Reporter Park Sun-mi] DB HiTek, benefiting from the prolonged shortage of 8-inch semiconductors, has decided not to consider investing in 12-inch semiconductor wafers for the time being. Since sales and profits are rapidly increasing in the 8-inch wafer sector, where the company has strengths, the strategy is to continue focusing on this successful business while concentrating efforts on developing power semiconductor process technologies based on silicon carbide (SiC) and gallium nitride (GaN), which have high added value and high entry barriers, for new businesses.

According to industry sources on the 13th, DB HiTek will announce its first-quarter earnings after the stock market closes today. The consensus estimates from securities firms for DB HiTek’s first-quarter sales and operating profit are 373.6 billion KRW and 150.4 billion KRW, respectively. These figures represent increases of 53% and 148% compared to the same period last year, indicating explosive growth in performance. A green light has been lit for the possibility of record-high sales and operating profits this year. DB HiTek, which surpassed 1 trillion KRW in sales for the first time last year after 20 years since entering the foundry (semiconductor contract manufacturing) business, is growing as a key affiliate responsible for cash flow within the DB Group, with forecasts suggesting sales could reach around 1.7 trillion KRW this year.

The main driver is the 8-inch (200mm) foundry. Semiconductor wafers have evolved from 6-inch and 8-inch to 12-inch (300mm), and as wafer size increases, their applications broaden, leading to a decline in the position of 8-inch products since the introduction of 12-inch wafers. In fact, global major foundry companies, including Samsung Electronics, are focusing on producing 12-inch wafers, which have higher added value. This has contributed to the perception of 8-inch wafers as "old" and 12-inch wafers as "new."

However, the supply shortage of 8-inch analog semiconductors used in automobiles, home appliances, laptops, and PCs continues, concentrating benefits on DB HiTek, which excels in small-lot, multi-product 8-inch production. DB HiTek plans to focus solely on 8-inch production, which is currently operating at full capacity, and will not invest in 12-inch wafers for the time being. A DB HiTek official dismissed the possibility of 12-inch investment, stating, "We are not considering it," and explained, "DB HiTek focuses on analog semiconductors with a small-lot, multi-product production method, so our investment strategy differs from TSMC and Samsung Electronics, which focus on small-product, large-volume production centered on 12-inch wafers."

Regarding the possibility of large-scale expansion investment to increase 8-inch production volume, the official added, "Rather than increasing production volume all at once, we will gradually increase it by actively responding to customer demand, reallocating production lines, and supplementing bottleneck process equipment," and "We are also pursuing an investment strategy to increase the proportion of high value-added products to enhance profitability."

DB HiTek has identified SiC and GaN-based power semiconductors as new growth engines. The company has been developing process technologies for SiC and GaN-based power semiconductors, which have high added value and high entry barriers, since last year, based on the technological expertise accumulated from its existing power semiconductor (PMIC) business. These semiconductors, which offer high power efficiency and durability, are next-generation products widely used in artificial intelligence (AI), 5G mobile communications, and the rapidly growing electric vehicle market. However, since development is still in the early stages, considering the need for 2 to 3 years for process development and customer acquisition, mass production is expected to be possible around 2024.