[Special Stock] Korea Circuit, Samsung's Main Vendor Targeting On-Device Absolute Leader 'Value Up'

Korea Circuit's stock price has been rebounding for four consecutive days. The launch of Samsung Electronics' artificial intelligence (AI) smartphone 'Galaxy S24' series, which ushered in the 'AI smartphone era,' appears to have influenced the stock price with expectations that Samsung will introduce 'Galaxy AI' features to wireless earphones as well. There is growing confidence in the forecast that Samsung Electronics will lead the on-device AI market by next year, leveraging the first-mover advantage of the Galaxy S24 in on-device AI phones.

As of 9:08 a.m. on the 14th, Korea Circuit was trading at 21,200 KRW, up 7.76% from the previous day.

Lee Jong-ho, Minister of Science and ICT, announced the major policy plans for this year. The Ministry of Science and ICT plans to prepare a '(tentative) On-Device AI Activation Strategy' to secure a leading position in the early-stage on-device AI market based on domestically produced AI semiconductors.

Along with government policies, optimistic forecasts for Samsung Electronics have emerged. Securities analysts predict that Samsung will expand cooperation with global software companies to build an AI ecosystem across 2 billion devices. Starting with the Galaxy S24 launch this year, it is expected to capture a 55% market share in the on-device AI market by next year.

Kim Dong-won, a researcher at KB Securities, said, "Samsung Electronics, with its hardware strengths, is expected to expand AI collaboration with global software companies through the open ecosystem of Android OS," adding, "Global big tech companies that need to expand AI are expected to attempt to build their own AI ecosystems by connecting to Samsung's 2 billion hardware devices."

Worldwide shipments of on-device AI devices are projected to grow more than tenfold from 29 million units last year to 300 million units this year. Samsung Electronics is strengthening support by sharing AI semiconductor design and production know-how with partners in its own foundry ecosystem (SAFE). Samsung has integrated Google and Microsoft AI into the Galaxy S24 and Galaxy Book4 series. Researcher Kim analyzed, "Current initial demand is increasing by 10-30% compared to previous models in global markets," and estimated that record-high sales volumes have been achieved.

According to IT-related foreign media, Samsung Electronics recently conducted an OTA (Over the Air) update in India to provide real-time translation functions for 'Galaxy Buds2 Pro,' 'Galaxy Buds,' and 'Galaxy Buds FE.' Users can speak directly into the Buds microphone and hear the translated voice through the Galaxy S24 series, enabling natural conversations. This feature is expected to expand not only in India but also to other countries. Samsung is also expanding the Galaxy AI experience to previous generation devices. The software update targets include the 'Galaxy S23 series,' 'Galaxy S23 FE,' 'Galaxy Z Fold5 and Flip5,' and 'Galaxy Tab S9 series.'

Samsung Electronics is expected to increase investments to capture more than 50% of the on-device AI market.

Korea Circuit, one of Samsung Electronics' key partners, has firmly established itself as the main vendor not only for the Galaxy S series but also for foldable smartphones, based on differentiated technology and quality. It has also solidified its position as a main vendor for augmented reality (AR) and virtual reality (VR) devices, smart glasses, Galaxy Watch and Buds series, and various wearable devices.

Preparations are steadily underway in response to the blooming AI semiconductor market. Development is ongoing for modules for DDR5 High Speed (6400Mbps) products, next-generation enterprise SSDs, CXL (Compute Express Link), and LPCAMM (Low Power Compression Attached Memory Module). Visible profit increases are expected when volumes expand significantly this year.

Since 2020, the proportion of high-value-added FCBGA has been increasing, which is expected to raise the average selling price. Park Kang-ho, a researcher at Daishin Securities, analyzed in a past report, "The growth axis of semiconductor substrates (PCB) going forward is judged to be FC BGA," adding, "AI sector investment expansion is driving relatively high demand growth for semiconductor substrate FC BGA related to servers, cloud, and networks." He further noted, "Server CPUs (Intel, AMD) and AI GPUs (NVIDIA) adopt FC BGA," and predicted, "There will be a trickle-down effect and spillover benefits during market expansion."

FC-BGA is a component that connects semiconductor chips such as central processing units (CPU) and graphics processing units (GPU) to the main substrate, transmitting electrical signals and power. It is mainly used in high-performance semiconductors requiring high-density circuit connections, such as in networks and automobiles. Korea Circuit supplies FC BGA to Broadcom, the world's second-largest AI semiconductor supplier, as well as to U.S. communication component companies.

Meanwhile, Interflex, a subsidiary of Korea Circuit, recently hit a new high following news of Samsung Electronics' plan to launch the 'Galaxy Ring' last month.