Semiconductors Aren't Made Alone...“Materials, Parts, and Equipment” Are Essential. ② Component & Material Companies

Samsung Electronics and SK Hynix perform rigorous inspections after semiconductor production to ensure quality, as defective units cannot be delivered to Nvidia or other clients. This process is categorized as back-end processing, specifically the final test after packaging. Since it prevents wasting all the previous efforts, it is arguably the most critical stage.


Essential components for semiconductor testing include pogo pins and test sockets. Semiconductors are placed into sockets connected to testing equipment to diagnose any anomalies. A socket contains numerous pogo pins, which transmit electrical signals between the chip and the socket to verify functionality. These pins are consumables that must be replaced after repeated use. As AI demand drives higher semiconductor production, sales for these parts naturally increase. Furthermore, high-performance chips require intensive verification during development, increasing the frequency and difficulty of testing. These chips demand arrays of thousands of pins with minimal alignment error, requiring new socket designs for each chip upgrade.


Consequently, component manufacturers are expected to see steady growth. South Korean companies in this field include Leeno Industrial, TFE, Okins Electronics, and Megatouch, all of whom supply Samsung and SK Hynix. Looking at the market leader, Leeno Industrial, its revenue is projected to grow from 372.5 billion KRW in 2025 to 444.5 billion KRW this year, reaching 672 billion KRW by the year after next. Operating profit is also expected to rise from 177 billion KRW in 2025 to 326.4 billion KRW over the same period.


Moving to the front-end process, the first stage of production, we find material suppliers. To etch circuits onto a wafer, specialized materials like etchants and cleaning agents are vital to avoid damaging expensive wafers. Etching removes unnecessary layers, while cleaning agents eliminate byproducts. Afterward, precursors are used to form thin films through chemical reactions, creating micro-circuits and insulation. Slurry is then required to polish the surface smooth.


These materials are consumables used repeatedly in every cycle. As AI accelerates semiconductor production, wafer input increases, directly boosting demand for these processing materials. Soulbrain is a prominent player in this sector, operating on a larger scale than Leeno Industrial. Its revenue is projected to grow from 923.4 billion KRW last year to 1.44 trillion KRW by the year after next, with operating profits expected to rise from 133.6 billion KRW to 312.6 billion KRW in the same timeframe.


Unfortunately, South Korean presence in wafer manufacturing is limited. While SK Siltron exists, the global market is dominated by Japan’s Shin-Etsu Chemical and SUMCO. Despite leading the world in memory and HBM, Korea remains dependent on imports for these foundational materials. Note that SK Siltron is a non-listed subsidiary of SK (slated for acquisition by the Doosan Group), so public earnings forecasts are unavailable.

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