[Click eStock] "FineMtech Draws 'Initial Orders' for North American Foldables as Competitor Quality Issues Create Opportunity"

FineMtech is securing new growth engines in the North American foldable smartphone market. Although the launch schedule for new products was delayed compared to the original plan, the recent expansion of backplate supplies for North America is now driving a significant effect from gaining new clients. In particular, as competing companies face initial quality issues, there are reports that initial order volumes are being concentrated with FineMtech, a verified supplier.

On September 17, Hana Securities projected that FineMtech's backplate sales targeting the North American market would exceed KRW 130 billion in the second half of this year. The brokerage also expected that the majority of the sales would be recognized in the fourth quarter.

Taewoo Kwon, an analyst at Hana Securities, explained, "Although mass production schedules for new products were delayed due to supply delays from an exterior hinge supplier, expanded shipments to North America have now resulted in new client acquisition beginning to show up in the sales numbers."

FineMtech's ability to expand its shipments in North America is attributed to quality issues with its competitors. Hana Securities analyzed, "With only a limited number of verified suppliers available and initial quality issues at competitors, initial order volumes appear to be concentrated with this company."

The foldable backplate is an ultra-thin metal plate that is directly bonded to the underside of flexible OLED panels. It serves as a key component, supporting and protecting the display during repeated folding cycles, and is critical to determining both the folding radius and the overall product form factor. FineMtech supplies backplate assemblies for both book-type and clamshell foldable products, and has internalized key processes such as etching, laser, nano-coating, and automated optical inspection (AOI).

The new orders from North America are expected to be a key driver of FineMtech's performance in the second half of the year. Shipments to domestic clients are also recovering. As the share of backplate supply, which had declined last year due to supplier diversification, increases again this year, second-quarter sales reached KRW 95.2 billion, up 24.4% from the same period last year, and operating profit came in at KRW 7.3 billion, a 38.6% increase.

The company expects further improvement in performance in the third quarter, driven by strong sales of new foldable models. Hana Securities forecasts third-quarter sales at KRW 150.3 billion and operating profit at KRW 19.1 billion, jumping 161.2% and 1,140.5% year-over-year, respectively. The operating margin is also estimated to improve to 12.7%.

Although the fourth quarter is typically a seasonal off-peak period, the company anticipates that North American orders will offset a decline in domestic sales. According to the company, order trends so far this year have also been better than usual. Hana Securities projects fourth-quarter sales at KRW 176.2 billion, up 17.2% from the previous quarter. However, operating profit is projected at KRW 16.1 billion, taking into account the initial mass production costs of new North American models.

Whether the procurement of initial North American orders becomes a one-off event will depend on how quickly yield rates stabilize. Hana Securities noted that once mass production stabilizes for new models and production efficiency matches that of existing flagship products, profit estimates could be revised upward.

Analyst Kwon commented, "Future profitability will hinge on how quickly yield rates stabilize for new models, and if the company can achieve production efficiency comparable to existing flagship products, there is room for upward revision of profit estimates."

Hana Securities estimates FineMtech's sales this year at KRW 467.8 billion and operating profit at KRW 40.3 billion, representing increases of 95.6% and 1,989.4% respectively from last year. For 2027, the brokerage forecasts sales of KRW 660.4 billion and operating profit of KRW 63.8 billion, as North American supply gets reflected throughout the full year.

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