[Click e-Stock] "Waveis Achieves Korea's First Localization of GaN RF Semiconductors... Rapid Earnings Recovery"

On October 29, Hana Securities analyzed that Waveis has achieved rapid earnings recovery since the second half of the year, following its successful localization of GaN (gallium nitride) RF semiconductor chips.

Yoo Gun Han, a researcher at Hana Securities, stated, "Waveis is the first company in Korea to localize mass production technology for GaN RF semiconductor chips. Compared to conventional vacuum tube-based TWTA RF power amplifiers or silicon-based LDMOS RF power amplifiers, Waveis' technology offers high voltage and high output characteristics."

Currently, Waveis supplies products to a wide range of advanced industries, including defense, anti-drone systems, mobile communication infrastructure, and aerospace. As of the first half of this year, approximately 90% of its revenue came from the defense sector, while the remaining 10% was generated from anti-drone and telecommunications-related sales. Han analyzed, "By achieving vertical integration from GaN RF semiconductor chips to packaged transistors and modules, Waveis has secured a competitive edge over other companies in terms of performance, delivery time, and cost competitiveness."

Globally, the supply shortage of GaN RF semiconductors is worsening. The market size is expected to grow from about 4.1 trillion won in 2023 to approximately 9.6 trillion won by 2030. However, with only a handful of major global suppliers such as MACOM, QORVO, and SUMITOMO ELECTRIC, the market remains supplier-dominated.

Han emphasized, "As export controls are tightened in various countries, products operating in frequency bands above 8GHz require complicated and time-consuming approval processes. Waveis, however, owns its own semiconductor chip mass production fab, enabling it to achieve an overwhelmingly short export review period and respond to delivery schedules more than 56% faster than global competitors."

The government's policy of localizing defense semiconductors is also expected to benefit Waveis. Currently, the localization rate of military semiconductors in Korea is only about 1%, but as the government pushes to strengthen independent defense capabilities, related technology development is accelerating. Han noted, "Waveis is the only company in Korea to have successfully localized up to the X-Band frequency range, and is expected to secure Ku and Ka bands in the future."

Waveis is expected to see a full-fledged earnings recovery starting in the second half of this year. The company has won a project for advanced weapon systems from BEL (Bharat Electronics), India's largest state-owned defense company, and is in discussions for follow-up development and mass production projects. In addition, the expansion of the UAV (unmanned aerial vehicle) market is likely to further boost anti-drone demand, increasing the possibility of additional orders.

Han projected, "With the recognition of backlogged orders as revenue and an increasing proportion of overseas sales, Waveis is expected to achieve sales of approximately 42 billion won in 2025 (up 42.9% year-on-year) and turn profitable with an operating profit of 300 million won. In 2026, sales are forecast to reach 53 billion won (up 26.2% year-on-year), with an operating profit of 4.6 billion won (an operating margin of 8.7%)."