Nepes has been steadily selling its shares in one of its key subsidiaries for the past month which critics say is aimed at saving another subsidiary that has accumulated losses over the years.
Nepes, from January 15 to February 21, has offloaded approximately 600,000 shares in total, or 4.93% of its stake, of Nepes Ark, securing it a cash of around 18 billion won.
While Nepes described the move as simple disposal in its filings to financial regulators, critics say it is likely doing so to inject cash into its poorly performing packaging subsidiary Nepes Laweh. Nepes has been lending cash and burdening the debts of Nepes Laweh, which has been in the red ever since it was founded in 2020.
In December, Nepes acquired Nepes Laweh’s 60 billion won debt as its subsidiary’s payment guarantor. Nepes also lent cash directly to Nepes Laweh twice; once in November 2022 and last year in August, each time having lent 30 billion won for a total of 60 billion won. The deadlines for both loans have also been extended from their original periods to November of this year.
Nepes Laweh recorded 30.4 billion won in operating loss in 2020; this increased further to 63.6 billion won the following year and to 69.8 billion won in 2022. While Laweh is yet to unveil its earnings for 2023, it likely posted similar losses to the prior two years.
Nepes Laweh was formerly the fan out-panel-level package (FO-PLP) business unit of Nepes before it split off in February 2022.
Fan out places the chip’s I/Os outside of the chip to increase the total number of I/Os by adding them to the package. PLP, instead of a 300mm wafer, uses a 600mm rectangle as the package for the chip. While PLP is advantageous in terms of productivity and unit price compared to wafer-level packages, it is more vulnerable to warpage during production which can cause defective circuits.
Sources said this makes securing yield rate difficult and it is why Nepes Laweh is facing difficulty securing customers.
The selling of shares of Nepes Ark and the negative impact Nepes Laweh’s performance is having on Nepes’ own earnings means the issue poses a huge risk for not just one company but the entire Nepes business group, critics say.
