[This Week's Column] Doosan Driven by 'Electronics'... Riding the AI Cycle

In-House Electronics BG Drives Profitability Up
Announces Massive 968.4 Billion Won Capacity Expansion
Shareholder Returns Enhanced with 3 Trillion Won Treasury Share Cancellation
Expanding Business Scope with SK Siltron Acquisition

Doosan is drawing attention as it embarks on a full-fledged transformation into a 'semiconductor company.' Although Doosan has long been associated with a heavy industry image, its in-house business unit, Electronics BG, is experiencing rapid growth based on CCL (Copper-Clad Laminate). Electronics BG recently announced a large-scale capacity expansion, and news of shareholder returns has also emerged, prompting a re-evaluation of the company’s stock price.

Doosan essentially serves as the holding company of Doosan Group. It owns more than 30% stakes in subsidiaries such as Doosan Enerbility, Doosan Robotics, and Doosan Tesna. At the same time, Doosan also directly operates its own businesses, including Electronics BG, the Digital Innovation BU (DDI), and Doota Mall.

For the second quarter of this year on a consolidated basis, revenue reached 5.5861 trillion won, up 5.0% year-on-year, while operating profit soared to 488.4 billion won, marking a 37.8% increase from the same period last year—beating market expectations. Among its proprietary businesses, Electronics BG was the key driver of this performance, with an operating profit of 201.3 billion won, accounting for 41.2% of Doosan’s total operating profit.

Record-Breaking Expansion and Shareholder Returns... Stock Price Soars

According to the Korea Exchange on September 23, Doosan’s stock rose by 21.56% over the past month. The stock closed at 1,078,000 won on August 21, and climbed to 1,432,000 won by September 21. On September 18, it even surpassed 1.5 million won intraday.

The large-scale capacity expansion announcement by Electronics BG has fueled this upward trend. On September 18, Doosan revealed plans to invest 968.4 billion won to expand its CCL (Copper-Clad Laminate) production capacity. CCL is a core material for PCBs (Printed Circuit Boards), which are used in AI accelerators, network switches, and optical modules. The expansion consists of a domestic investment of 421 billion won and an overseas investment of 547.4 billion won through Doosan’s wholly owned subsidiary in Changshu, China.

This capacity boost is expected to help address shortages in the CCL market and enhance profitability. CCL demand is rising as investments in AI data centers increase, and prices are also trending higher. Until now, Electronics BG had been limited in responding to rising demand as its facilities have been operating at over 100% capacity. Hyunji Cho, a researcher at DB Securities, observed, “Through this expansion, Doosan can not only accommodate growing shipment volumes from existing customers but also secure new clients in the ASIC (Application-Specific Integrated Circuit) market. In particular, diversification of the customer base will, over the mid- to long-term, act as an important foundation by strengthening Doosan’s bargaining power over price and volume.”

The industry expects Electronics BG’s production capacity, based on sales, to increase to as much as 7 trillion won following the expansion. Minkyu Kwon, a researcher at Kiwoom Securities, predicted that the current capacity of about 2.6 trillion won will grow to 7 trillion won by 2029, approximately a 2.7-fold increase. He noted, “The previous investment plan was to increase production capacity to generate 750 billion won in sales by 2028, but the latest announcement increases the planned investment by 483% compared to the previous plan. This disclosure significantly upgrades Doosan’s mid- to long-term growth prospects.”

Doosan is also receiving positive reviews for its shareholder return initiatives. On September 17, Doosan decided to cancel all of its treasury shares worth 3 trillion won. Suhyun Kim, a researcher at DS Investment & Securities, commented, “Among holding companies, Doosan is regarded as the most proactive in enhancing shareholder return and corporate value under the Fair Trade Act. Its credibility in delivering on its promises of value-up—such as the capacity expansion, full cancellation of treasury shares within the year, and the acquisition of SK Siltron—is the highest among listed companies.”

If Doosan successfully completes the acquisition of SK Siltron, the company plans to further expand its presence in the semiconductor sector—moving from post-processing (Doosan Tesna) and CCL (Electronics BG) into the wafer business as well.

Large-Scale Investment—Any Financial Strain?

The current expansion for Electronics BG will be funded by internal cash reserves and loans. There are no plans to raise capital through new stock issuance or mezzanine financing. Adding the 2.3 trillion won SK Siltron acquisition to this, Doosan’s loan-based fundraising will increase further.

Nevertheless, credit rating agencies believe Doosan has sufficient capacity to manage its funding needs at present. Sunyoung Chae, Senior Analyst at Korea Ratings·KR, said, “Based on Electronics BG’s enhanced earning power and asset value, as well as Doosan Group’s top-tier creditworthiness as its highest-level operating company, Doosan should have enough financial flexibility to meet its investment requirements. Considering its strong business competitiveness and the expected expansion of cash flow after the expansion, the increased debt burden from the investment is also expected to ease over time.”

However, she added that if the premise of surging AI demand were to waver, financial burdens could arise. Chae continued, “Given that this investment decision is premised on expectations of strong demand related to AI, there remains a risk of fluctuations in business performance if the demand environment changes. If demand after the expansion falls short of expectations, lower utilization rates could result in a longer return-on-investment period, and the timeline for easing the financial burden from the expansion could be delayed.”

There are also concerns surrounding 'Polytetrafluoroethylene (PTFE),' which is emerging as a potential substitute for CCL. Recently, there have been suggestions that PTFE may be applied to NVIDIA’s next-generation ‘Rubin Ultra.’ Seungsoo Yang, a researcher at Meritz Securities, stated, “The rise of PTFE represents a segmentation of material usage driven by advancements in AI PCB, rather than a wholesale replacement of high-end CCL. Doosan Electronics BG’s differentiated CCL technology and high barriers to entry—maintaining its position as the sole vendor for computer boards from Blackwell to Rubin—will become even more prominent.”

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