South Korean chip packaging and testing companies posted mixed results in their second quarter earnings.
Those working with system semiconductors saw earnings improve substantially while their counterparts specializing in memory chips recorded lackluster results.
This is due to SK Hynix doing more of its own packaging and testing.
TheElec collected earnings of ten South Korean chip back-end companies.
Hana Micron, SFA Semiconductor, LB Semicon, Signetics and Tesna all saw year-on-year growth.
However, Nepes, despite specializing in system semiconductors, saw sales increase but posted a loss due to increased spending in its fan out panel level package (FO-PLP) facility.
Demand for display driver ICs, CMOS image sensors and SoCs are high from increased sales of electronic products.
System chips also usually carry a higher price tag than memory chips.
Hana Micron posted 154.1 billion won in sales and 22.6 billion won in operating income during the quarter, an increase of 25.5% and 140.4%, respectively, from the previous year.
The company usually handled mobile memory chips made by SK Hynix, Samsung and Micron such as eMMC, eMCP and LPDDR but it has won new orders for server DRAMs in the second quarter.
Server memory chips are usually packaged using flip chip, making them more profitable than mobile chip packaging. Hana Micron is also overseeing packaging of Samsung’s power management IC and touch IC, which helped with growth.
Non-memory chips had accounted for 51% of its sales in 2018 but this has increased to over 62% during the first half of 2021.
SFA Semiconductor recorded 152.6 billion won in sales, nearly same as the previous year but its operating income doubled to 16.6 billion won over the same time period.
The company oversees packaging for Samsung’s system and memory chips. As the South Korean tech giant is expanding its system chip business, SFA has also seen its earnings improve along with the trend. As of the second quarter, however, memory chips still accounted for 85% of its sales, while non-memory chips accounted for 14.8%.
Signetics returned to profitability in the second quarter having posted 5.1 billion won in operating income and sales increased 40% year-on-year to 62.7 billion won. Out of the sales, 52% came from memory and 48% from non-memory.
LB Semicon and Tesna both saw earnings improve thanks to increased order for CMOS image sensor testing from Samsung.
LB Semicon recorded 121.6 billion won in sales and 12.6 billion won in operating income, an increase of 14.1% and 51.9%, respectively, from the previous year.
Tesna posted 43.2 billion won in sales and 8.2 billion won in operating income, an increase of 36.7% and 1.2% respectively, over the same time period. The company is planning spend 81.9 billion won to expand its CMOS image sensor testing facilities.
Meanwhile, ATSemicon, Winpac and APACT, which are all back-end suppliers to SK Hynix, saw their earnings drop during the second quarter.
ATSemicon recorded more loss compared to a year ago. Winpac also turned to the red. APACT saw operating income drop 23.5% year-on-year to 1.3 billion won.
SK Hynix is doing more of its own packaging and testing, while sometimes the company will order less volume than it previous committed to, a person with direct knowledge of the matter said.
The packaging and testing industry has high fixed costs and the declining order from the memory giant was hurting earnings, they said.
SK Hynix had been fostering its own testing ecosystem since the early 2000s. APACT was formed by 35 companies in SK Hynix’s supply chain. Samsung, meanwhile, fully tests its own memory chips.