SKC Glass Substrates Enter Yield Stabilization Phase... “First Mass-Production Qualification Is Key”: IBK Securities

[Financial News] An analysis indicates that SKC’s glass substrate business is moving from the technology development stage into commercialization preparations, including customer qualification and yield stabilization. As Absolics’ recent hiring, patents, and use of investment funds have focused on production and quality management, the key variable for SKC’s share price is expected to shift from the outlook for growth in the glass substrate market to the first customer’s mass-production qualification.
According to IBK Securities on the 10th, the key variable for SKC’s share price is the first customer’s mass-production qualification rather than forecasts for the glass substrate market. Absolics’ hiring and patent portfolio were cited as indicators of its transition into the commercialization preparation stage.
IBK Securities analyzed Absolics’ U.S. job postings released the previous day and found notable hiring for roles closely related to customer qualification and production, including new-product mass-production conversion, process integration, quality and inspection, statistical process control, and production technology.
Based on disclosures from the first half of this year, Absolics was found to hold 155 registered patents and 535 patent applications. IBK Securities analyzed that the company’s patents, which initially focused on product structures, have recently expanded into mass-production processes, including adhesion, long-term reliability, micro-hole processing, laser drilling, large-panel exposure, and links to a Manufacturing Execution System (MES).
The use of recently raised funds is also focused on customer qualification and production stabilization. Absolics decided on a 401.1 billion won rights offering on the 21st of last month. The funds will be used for glass substrate evaluation, customer qualification, and the supplementation of facilities and equipment to improve production-process yields and quality. SKC also held a board meeting on the 4th and decided to acquire 192,416 newly issued shares of Absolics for approximately 281 billion won, in line with its 70.05% ownership stake.
By product, a strategy is underway to commercialize embedded and non-embedded products simultaneously. According to SKC, samples of the embedded product produced at its Georgia, U.S., plant have completed preliminary evaluations, including assessments of their electrical characteristics, and entered reliability testing. The non-embedded product is participating in a project for which supplier selection is scheduled for the second half of this year, and the company is preparing to enter proof-of-concept (PoC) testing within the year, depending on the final selection results.
Dongwook Lee, a researcher at IBK Securities, said the expansion of non-embedded products should not be interpreted as a retreat from the existing embedded technology strategy. Embedded products, which incorporate components such as multilayer ceramic capacitors (MLCCs) inside the substrate, are advantageous for high integration and thinner designs, but they involve greater process complexity and yield pressure. Non-embedded products do not have components embedded inside, so they impose a relatively smaller burden on customers to change their designs. The strategy is to expand the customer base initially with products that have lower adoption barriers and eventually broaden the portfolio to embedded products.
Competition in the glass substrate market, however, is also intensifying. Intel announced a strategic partnership with China’s Lens Technology in July to develop advanced semiconductor packaging technologies based on glass substrates. The two companies agreed to examine potential cooperation on key manufacturing processes required for mass production, including through-glass vias and precision laser processing. Samsung Electro-Mechanics is also pursuing the establishment of a joint venture with DONGWOO FINE-CHEM to produce glass cores, a key material for glass substrates.
Lee noted, “Even if competitors increase their capital expenditures, it will be difficult to catch up in a short period with the time Absolics has gained by establishing a U.S. production base first and accumulating experience in customer evaluations and process stabilization.” In other words, once the first customer’s mass-production qualification is secured, the market’s evaluation criteria could shift from the current scale of losses to the number of customers, production capacity, and mass-production yield.
[email protected] Kim Mi-hee Reporter