Sungho Electronics poised to clear shipment backlog... Earnings rebound expected from AI optical communications equipment

[Financial News] Brokerage analysts expect Sungho Electronics to overcome shipment delays caused by shortages of key components and begin a full-fledged earnings recovery next year. With orders growing for optical communications equipment for AI data centers, supply chain normalization and entry into the market for Co-Packaged Optics (CPO), a next-generation optical communications technology, are seen as growth drivers.
On the 3rd, Yang Seungsoo, an analyst at Meritz Securities, estimated that Sungho Electronics subsidiary ADS Tech had received about 80 billion won in orders cumulatively through the third quarter of this year. He projected that the figure would rise to 100 billion won by year-end. By contrast, revenue in the first half was just 18.8 billion won, with operating profit of 6.3 billion won. Equipment shipments were delayed because of a shortage of stages, a key component. He did not provide an investment rating or a target price.
However, parts availability is expected to improve starting in December as suppliers in Japan expand production capacity and the company secures a new supplier in Taiwan. As a result, ADS Tech’s revenue in the second half is expected to rebound to 33.8 billion won, with operating profit reaching 12.8 billion won.
The improvement in earnings is expected to be even greater next year. Meritz Securities estimates ADS Tech’s 2027 revenue at 162.5 billion won and operating profit at 74.8 billion won, up 221.8% and 181.7%, respectively, from the previous year.
Demand for equipment replacements is growing as existing optical transceivers transition from 800G to 1.6T. Yang said, “It is understood that the company is the sole supplier to its key North American customer after competing suppliers failed to obtain quality certification.” He added, “There is also a possibility that equipment shipments next year could at least double from this year as CPO-related volumes increase.”
The development of CPO equipment for server racks based on NVIDIA Vera Rubin, NVIDIA’s next-generation platform, and new orders related to fiber array units (FAUs) are also seen as medium- to long-term growth drivers.
Yang said he expects most of Sungho Electronics’ consolidated operating profit to come from ADS Tech starting in 2027. He described this as “a period in which the company’s transformation into an equipment maker focused on AI data centers is gathering pace.”
[email protected] Kim Gyeong-a Reporter