Leno Industrial Enters a Technological Inflection Point [Click eStock]

High Growth Amid Stagnant Mobile Market
Next-Generation Demand Driven by Technological Moat

Leno Industrial once again delivered a surprise performance in the third quarter of this year, surpassing market expectations. Despite concerns about mobile demand and the profitability of component manufacturers, analysts believe the company will continue its stable growth trajectory, backed by its technological moat.

On November 21, Hana Securities raised its target price for Leno Industrial by 6.2% to 69,000 won, citing these factors. The previous day's closing price was 58,100 won.

For the third quarter of this year, the company reported sales of 96.8 billion won and operating profit of 48.3 billion won, up 40% and 57%, respectively, compared to the same period last year. By product, sales were comprised of 24 billion won from Leno pins, 63.4 billion won from test sockets, 9.4 billion won from medical devices, and 900 million won from other segments.

Robust demand for both mass production and research & development (R&D) test sockets was driven by the peak season for major application processor (AP) customers. Major AP companies are set to introduce 2-nanometer processes in 2026, and as integration density increases, the corresponding rise in unit prices for test sockets and pins is believed to have boosted sales. Analysts expect this strong performance to continue until the mass production of 2-nanometer-based APs begins next year.

For 2026, the company is projected to achieve sales of 450.6 billion won and operating profit of 217.2 billion won, representing growth of 23% and 25%, respectively, compared to this year's expected full-year results. In addition to price increases driven by the need to accommodate finer pitches, the recent addition of various options-such as thermal management features-to test sockets has also led to higher prices. Beyond price hikes, Apple is expected to increase test pin volumes by 15-20% as it adopts WMCM packaging for its 2-nanometer process to improve yield and integration density. If WMCM packaging becomes more widespread, overall demand is likely to increase significantly.

Kim Minkyoung, a researcher at Hana Securities, stated, "It is the R&D test sockets, rather than those for mass production, that are driving Leno Industrial's performance. While mobile shipments are expected to grow by 2%, Leno Industrial's operating profit is projected to increase by about 37%. Although there are concerns about mobile demand and the profitability of other components next year due to the sharp rise in AP and memory semiconductor prices, Leno Industrial is expected to maintain stable earnings growth based on its technological moat."

This content was produced with the assistance of AI translation services.