Semiconductor Equipment Sector Takes a Breather on Earnings, with Expectations for a Stronger Second Quarter

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The first-quarter results of semiconductor equipment makers fell short of market expectations. However, as the global semiconductor market has entered a full-blown supercycle this year and equipment orders have surged accordingly, earnings are expected to improve noticeably from the second quarter.
According to industry sources on the 17th, SHINSUNG E&G remained in the red in the first quarter of this year. Sales rose 32% from a year earlier to 153.7 billion won during the period, showing solid performance. But delays in shipments in its renewable energy business limited profitability improvements.
SHINSUNG E&G focuses on equipment used in cleanrooms, the controlled spaces where semiconductors are manufactured, including FFU (Fan Filter Unit), EFU (Equipment Fan Filter Unit), and OAC (Outdoor Air Control Unit). In particular, it remains the global leader in FFU, an industrial air purifier installed on semiconductor cleanroom ceilings, with more than 60% of the world market.
Jusung Engineering and HANMI Semiconductor both saw declines in sales and profit. Jusung Engineering's first-quarter sales fell 55% from a year earlier to 54.8 billion won. As sales dropped, operating profit swung to a loss of 7 billion won from a profit of 33.9 billion won a year earlier.
Jusung Engineering is strong in the field of atomic layer deposition (ALD) equipment, which precisely applies the materials needed on semiconductor wafers at the atomic level. More recently, it has been expanding the use of atomic layer growth (ALG) equipment, which allows atoms to grow on semiconductor wafers on their own, following ALD.
HANMI Semiconductor's sales in the same period fell 65.5% year on year to 50.9 billion won from 147.3 billion won. Operating profit dropped 87.9% over the same period, from 69.6 billion won to 8.5 billion won. HANMI Semiconductor remains the world's No. 1 player in the thermo-compression bonder segment, a key piece of equipment used in high-bandwidth memory (HBM) production.
Still, the consensus among semiconductor equipment makers is that earnings will improve more sharply from the second quarter. The view is that this is due to the global semiconductor market entering a supercycle, prompting major chipmakers at home and abroad, including Samsung Electronics, SK hynix, and U.S.-based Micron, to compete in boosting investment.
In fact, semiconductor investment in South Korea alone is expected to reach 100 trillion won this year. Semiconductor Intelligence projected that Samsung Electronics will invest $40 billion, or about 59 trillion won, while SK hynix will invest $27.4 billion, or about 40 trillion won.
As a result, orders for semiconductor equipment makers have been surging since the first quarter. For example, SHINSUNG E&G said the value of contracts signed to supply cleanroom equipment and other products during the period rose 203% from a year earlier.
“Semiconductor equipment is typically manufactured over several months after an order is placed, and revenue is recognized when it is delivered,” an industry official said. “Given the sharp increase in orders for semiconductor equipment makers since the start of this year, earnings, including sales, are likely to rise significantly from the second quarter compared with the first quarter.”
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butter@fnnews.com Kang Kyung-rae Reporter