[Click eStock] "KCS, First in Korea to Develop Quantum Cryptography One-Chip... Set to Benefit from Commercialization"

On February 13, KB Securities projected that KCS, as the first domestic developer of a quantum cryptography one-chip, is poised to benefit if quantum communication technology becomes commercialized.

KCS was established in 2002 through a physical spin-off from Korea Holdings (formerly Korea Computer Holdings). The company maintains a stable cash cow, with service revenue-including maintenance and service contracts-accounting for the high-50% range of its total sales.

However, its provisional results for last year showed a weak performance compared to the previous year. Revenue fell by 38.1% year-on-year to 29.5 billion KRW, while both operating profit and net profit declined by 37.1% and 27.9%, respectively, each recording 2 billion KRW.

Lim Sangkuk, a researcher at KB Securities, analyzed, “The contraction in downstream industries and reduced investment by client companies led to a decline in product sales revenue, resulting in the poor performance.”

Recently, the emergence of quantum computers, which possess innovative computational capabilities, has drawn significant attention to quantum technology as the next-generation game changer. The main areas of quantum technology are quantum communication, quantum sensing, and quantum computing. In particular, building quantum computer networks to connect quantum devices-such as for physical secure communication and quantum computers-has become a critical challenge. As a result, there is growing recognition of the need for new quantum cryptography communication technologies to replace existing digital encryption systems and networks.

KCS possesses a range of cryptographic communication solutions, including its self-developed communication encryption chip ‘KEV7’ and various products utilizing quantum random number generator (QRNG) technology, to secure its position in quantum cryptography communication. Lim noted, “KCS jointly developed the nation’s first quantum cryptography one-chip, ‘QKEV7’, in 2023 by integrating SK Telecom subsidiary IDQ’s QRNG chip with its own KEV7 communication encryption chip. This chip passed the National Intelligence Service’s cryptographic module verification in November 2024.”

Additionally, KCS is accelerating the commercialization of quantum communication chips for the Internet of Things (IoT) by developing the high-performance Ethernet packet quantum encryption and decryption solution ‘QKGW100C’ for smart home applications. Lim forecasted, “If quantum communication technology enters full-scale commercialization, KCS will be able to secure strong growth momentum.”