PSK, Semiconductor Equipment Investment Reduction Continues

[Asia Economy Reporter Jang Hyowon] BNK Investment & Securities on the 15th issued a 'Hold' investment rating on PSK, stating that its performance is expected to slow down in the second half of this year due to the overall reduction in capital expenditures in the semiconductor industry.

PSK is a company that manufactures and sells four products, including semiconductor front-end equipment PR strip. Its major customers include Samsung Electronics, Micron, and Intel. Although the main product PR strip accounts for 70-80% of total sales, new products belong to a high value-added product group with prices more than twice as high.

Lee Minhee, a researcher at BNK Investment & Securities, said, “NAND prices have fallen to the cash cost level of latecomers, and DRAM profitability has also significantly declined, leading to active production cuts in the industry. While expectations for a bottoming out of the market have recently increased due to industry production cuts and investment reductions, a recovery in the market requires signs of demand improvement, which remain uncertain.”

The researcher added, “Inventory adjustments by semiconductor customers began in earnest from the third quarter of this year, and considering the current consumption trend and duration, inventory adjustments are expected to continue until the first half of 2023. Pressure to reduce customer capital expenditures is likely to persist for some time.”

He continued, “Although there is momentum from new product supply and equipment deliveries for Samsung P3 starting from the end of the year, the scale of capital expenditures is likely to shrink. Due to conservative customer investment trends, performance is expected to slow down from the second half of this year.”