Daishin Securities on the 10th downgraded the target price for Simtek from 47,000 KRW to 37,000 KRW, citing a decline in package sales due to poor performance in the fourth quarter of last year and a semiconductor market downturn this year, which is expected to reduce overall sales and operating profit by 35.1% and 76.7% year-on-year, respectively. However, the buy rating was maintained.
Simtek's performance this year is expected to slow down in the first half. However, it is analyzed that profitability will enter a normalization phase due to increased semiconductor shipments in the second half, the transition to DDR5, and expanded non-memory sales such as FC CSP and AiP.
Operating profit for the fourth quarter of last year was estimated at 32.6 billion KRW, significantly below the consensus estimate of 65.1 billion KRW. Sales were identified at 328 billion KRW, down 30.9%. Due to the slowdown in demand and production of memory semiconductors, sales are expected to decline across all sectors including semiconductor packages and memory modules. Operating profit margin is projected to fall by 14.6 percentage points to 10% due to increased fixed costs and price reductions of key products.
Park Kang-ho, a researcher at Daishin Securities, explained, "The first quarter of this year is expected to be a difficult period," adding, "Sales are expected to decrease by 39.7% to 197.9 billion KRW, and operating profit is expected to turn to a loss."
He continued, "Due to decreased shipments from memory semiconductor companies, sales centered on packages and memory modules are declining, increasing the burden of fixed costs. However, operating profit is expected to return to profitability in the second quarter, with profitability improving from the third quarter onward due to increased package sales."
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