[Click eStock] "MK Electron to Be Revalued as AI Packaging Materials Stock on SoCAMM2 Growth"

There are expectations that MK Electron, a semiconductor back-end process materials company, will leverage the expansion of the artificial intelligence (AI) server market to further broaden its business structure beyond bonding wires. With the spread of SoCAMM2 applied to Nvidia's next-generation platform, the company’s range of beneficiary products could widen to not only bonding wires but also high-value packaging materials such as solder balls.

On the 2nd, Lee Junseok, an analyst at Hanyang Securities, said of MK Electron, "It is not simply a beneficiary of the SoCAMM trend but a company equipped with the full suite of AI packaging solutions," highlighting its future growth potential.

MK Electron is a key player in semiconductor back-end process materials, focusing on the production of bonding wires and solder balls. Listed on KOSDAQ in 1997, the company has secured more than 150 customers, including Samsung Electronics, SK hynix, and global semiconductor back-end process firms. MK Electron maintains the top position in the global bonding wire market with a share of about 22%.

Currently, the majority of its semiconductor division revenue comes from bonding wires, but recently, growth in more profitable products such as solder balls and plating wire has become prominent.

Analyst Lee noted, "Based on over 40 years of business experience, MK Electron has entered established supply chains, including those of memory chip makers," and explained, "The proliferation of SoCAMM2 will be a turning point, shifting MK Electron’s bonding wire business toward becoming a growth axis for AI server materials."

In particular, the LPDDR5 packaging mounted on SoCAMM2 is seen as a major factor. SoCAMM2 is the memory module expected to be adopted in Nvidia's next-generation AI server platform. In this LPDDR5 package, gold bonding wires are used to connect the chip and the substrate.

Because MK Electron supplies these products to both major memory manufacturers, it is expected that the company could directly benefit as SoCAMM2 becomes more widely adopted. As LPDDR, which had primarily been used in the mobile market, expands into the AI server market, it is creating new demand for bonding wires.

In fact, MK Electron's monthly domestic shipment of gold wire increased from about 60,000 km last year to 75,000 km in the second quarter of this year. Analyst Lee forecasts, "With the expansion of the AI server market, the growth trend in gold bonding wire sales will continue."

There is also a possibility that the scope of benefits will extend beyond bonding wires. The LPDDR package for SoCAMM2 uses bonding wires to connect the chip and substrate, while solder balls are utilized in the process of joining the package to the module PCB. Thus, based on its existing bonding wire supply track record, the company could further expand its supply into solder balls as well.

Analyst Lee added, "In the medium to long term, it is worth noting the potential for cross-selling solder balls for SoCAMM2," and stated, "With Samsung Electronics diversifying its solder ball supply chain and MK Electron simultaneously expanding its market share, this is a scenario that holds substantial promise."

Performance improvement is also expected to accelerate. Hanyang Securities estimates MK Electron’s consolidated revenue this year will reach 2.1 trillion won, an increase of 49.6% from last year. Operating profit is projected to surge 498.7% to 85 billion won.

As demand for bonding wires rises, and the proportion of high-value-added products such as plating wire and solder balls grows, both top-line growth and profitability are projected to improve at the same time.

Regarding the recent cartel issue, which has been the cause of recent share price adjustments, the research analyst cautioned against excessive concern. Lee explained, "This matter arose during the price negotiations between companies amid a sharp rise in gold prices, and its structure and nature differ from the conventional inter-company price fixing that directly targets end consumers," evaluating that "key customer supply and core business operations remain normal."

The analyst also expects that related costs will have only a limited impact on earnings. The potential cost is estimated at about 10 billion won and is likely to be classified as a non-operating expense.

Looking ahead to 2027, Analyst Lee noted that while this year marks a phase of improving core business performance through increased bonding wire sales, beginning next year, the mass production of SoCAMM2 and the introduction of new high-value-added products will serve as additional growth drivers.

He commented, "In 2027, SoCAMM2, along with solder paste, palladium alloy (Pd Alloy), and micro solder balls, will join as new growth axes," adding, "There is a high possibility that MK Electron will be re-evaluated as a comprehensive AI packaging materials company spanning from bonding wires through solder balls."

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