"TLB Set to Capitalize on SOCAM Boost as NVIDIA’s CPU Gains Momentum" [Click e-Stock]

"Full-Scale SOCAM Supply Begins... Order Backlog Surges"
Memory Module Dedicated to NVIDIA Vera CPU

TLB, a company specializing in memory substrates for servers, is projected to experience rapid growth in performance, driven by the benefits of supplying ‘SOCAMM2,’ a memory module designed for NVIDIA’s next-generation CPU. This is according to recent analysis from the securities sector.

According to IBK Securities on August 27, researcher EunAe Cho stated the previous day, “SOCAMM, the memory module supporting NVIDIA’s new CPU ‘Vera,’ is set to benefit,” initiating coverage with a Buy rating and a target price of 53,000 won. She noted that as Vera begins to be adopted by data centers at companies such as Microsoft and SpaceX AI, the resulting SOCAMM sales will be fully reflected in TLB’s earnings.

“In the Era of Agentic AI, Soaring Demand for CPU-Dedicated ‘SOCAMM’”

Researcher Cho explained, “As artificial intelligence (AI) evolves from learning-based models to agentic AI, system requirements are expanding from GPU (graphics processing unit) computation to encompass overall data processing performance, including CPUs and memory.” This is because, under agentic AI workloads, the importance of CPUs—which are responsible for decision-making and the execution of tasks—increases significantly.

Vera, NVIDIA’s agentic AI-dedicated CPU, which is designed in-house, has adopted SOCAMM, a next-generation low-power memory module. SOCAMM provides over twice the bandwidth and more than 75% improved energy efficiency compared to conventional server DRAM modules (RDIMM).

The full-scale ramp-up of SOCAMM sales can also be seen in TLB’s order backlog. In the second quarter of this year, the company’s order backlog surged to 13.18 billion won from 3.62 billion won in the previous quarter. Cho estimates, “The price of SOCAMM is about three times higher than that of general server memory substrates manufactured by TLB, and as its share of total sales is projected to rise from 16% this year to 30% next year, this will drive up the average selling price and improve margins.”

This Year’s Operating Profit to Jump 121% Year-on-Year...Expectations for Earnings Re-Rating

TLB’s sales guidance for SOCAMM this year has also been raised three times—from 20 billion won at the start of the year to 50 billion won after the first quarter results, and up to 70 billion won following the second quarter. Cho forecasts, “As bottle-neck alleviating mass lamination (laminated compression process) equipment comes online at Vietnam Plant 2 and the Ansan plant, TLB’s production space will expand from 65,000 square meters in the second quarter to 72,000 square meters in the fourth quarter.”

IBK Securities projects TLB’s total revenue for the year at 371.3 billion won (up 44% year-on-year), with operating profit at 57.5 billion won (up 121%). As the share of high value-added products like SOCAMM increases, the gross profit margin is expected to improve to 21% (up 6 percentage points), and the operating margin to 15% (up 5 percentage points).

The brokerage also expects a valuation re-rating based on the price-to-earnings ratio (PER). Researcher Cho added, “As the mass production of the Vera CPU expands, only five companies globally—including TLB—can supply SOCAMM substrates, with TLB’s market share estimated at about 20%. Given that TLB’s earnings are highly sensitive to SOCAMM sales growth, the simultaneous increase in EPS (earnings per share) and the anticipated valuation re-rating could occur in tandem.”

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