[Click eStock] "DDR5 Production Increase, Focus on Post-Processing Companies"

SK Securities stated that semiconductor DRAM DDR5 inventory is limited, and they expect the increase in DDR5 production to directly benefit the back-end process, recommending an expansion of semiconductor exposure. DDR5 is the fifth upgraded technology standard since DDR DRAM, which significantly improved the speed of existing DRAM, was released in 2001.

Han Donghee, a researcher at SK Securities, said in a report on the 19th, "The increase in DDR5 production is expected to immediately become a momentum for the back-end process."

Unlike DDR4, DDR5 has very limited inventory among customers and suppliers, so it does not go through the 'supplier’s finished product inventory depletion' process. This process tends to lengthen when inventory is high and shipments are sluggish, but currently, the DDR5 proportion of DRAM inventory in the industry, including suppliers and customers, is estimated to be below 10%. The supply and demand for high-capacity products are understood to be very tight.

The expansion of DDR5 by suppliers is generally expected to have a positive effect on back-end process prices. Basic price increases due to specification upgrades, increased test time per product, and module unit price increases due to a higher number of components can be anticipated.

The researcher pointed out exposure, new components, and market share as DDR5 investment strategies. After hitting a low in first-quarter earnings, the overall back-end process is expected to start a recovery trend, with the DDR5 effect becoming full-fledged in the third quarter. From the perspective of speed and strength of benefits, attention was drawn to Hanamicro and Hanyang Digitech.

DDR5-related earnings momentum is expected to be reflected in the third quarter for passive components and in the fourth quarter for test sockets, with full earnings reflection anticipated from 2024. Reflecting on DDR4, the benefits for related companies in this cycle are clear, and Abico Electronics and ISC are expected to benefit.

Some parts of the substrate business have already confirmed the bottom of demand and started to rebound from the second quarter. Among them, TL Bi, which has a high DDR5 proportion, was highlighted. It is forecasted that the DDR5 proportion could exceed 30% by the end of the year. Haesung DS, Simtek, Daeduck Electronics, and Korea Circuit are also expected to benefit from DDR5.