'All-In on AI' Push Dries Up Legacy Substrates... "Daeduck Electronics to Reap Earnings Windfall" [Click eStock]

Forecast to Top 80 Billion Won in Q3 Operating Profit
"Higher Share of High-Value Products and Price Increases"
Profitability Improvement Accelerates

Securities analysts say Daeduck Electronics is expected to continue improving its earnings, driven by a higher share of high-value printed circuit boards and product price increases.

On Oct. 19, Park Jun-seo, an analyst at Mirae Asset Securities, maintained a Buy rating and a target price of 180,000 won for Daeduck Electronics, saying, "Although exchange-rate and macroeconomic uncertainties persist, industry conditions are actually strengthening further."

Mirae Asset Securities estimated Daeduck Electronics' revenue for the third quarter of this year at 419 billion won, up 46.4% year on year, and operating profit at 80.4 billion won, up 228.7%. It forecast an operating margin of 19.2%.

AI-Driven Substrate Crunch Turns Even Traditional Substrates into a 'Supplier's Market'

Analyst Park said, "Profitability is improving faster than expected as the growing share of high-value products, including FC-BGA (flip-chip ball grid array) and MLB (multi-layer printed circuit boards), coincides with price increases. This is a period in which supply shortages and an improved product mix are having a greater impact on earnings than external uncertainties." He added that earnings are expected to continue trending upward in the fourth quarter, given the possibility of further price increases.

FC-BGA is a high-value substrate that connects high-performance PCs, servers and artificial intelligence (AI) semiconductor chips to main boards, while MLB is a multilayer substrate primarily used in telecommunications network equipment and AI accelerators. Daeduck Electronics is boosting profitability by increasing the share of these high-value products.

Structural supply shortages are benefiting Daeduck Electronics. Global substrate manufacturers are pouring large-scale investment into production capacity for AI-focused FC-BGA alone, backed by advance payments and volume guarantees from major big-tech customers. As a result, investment has declined in BT (bismaleimide triazine) substrates for traditional memory semiconductors, which are relatively less profitable. With new capacity additions limited, these substrates are facing a severe supply shortage.

Analyst Park said, "Paradoxically, the concentration of global capacity expansion on FC-BGA is prolonging the supply shortage of BT substrates. Price increases are highly likely to continue as a medium- to long-term trend rather than as a one-off event."

"New Customer Wins and a Narrowing Technology Gap Open Up Medium- to Long-Term Growth Prospects"

Strengthening technological competitiveness and increasing supply volumes through new capacity additions are also key points to watch over the medium to long term. Daeduck Electronics is narrowing the gap with global leaders by focusing on FC-BGA substrates with up to 20 layers and a large form factor, a technically demanding product, and is negotiating supply terms with new customers on favorable terms.

Accordingly, the company's annual earnings are also expected to rise steeply. Mirae Asset Securities estimated Daeduck Electronics' revenue for this year at 1.617 trillion won and operating profit at 292 billion won. Next year, revenue is expected to reach 2.091 trillion won and operating profit 445 billion won.

Analyst Park added, "While concentrated investment by global competitors is prolonging supply shortages across existing product lines, the company is also securing room for growth through new capacity additions. Ahead of 2027, when higher prices (P) and an improved product mix will be accompanied by increased volume (Q), investors should watch for the possibility of further upward revisions to earnings estimates."

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