MERITZ Securities projected that the semiconductor equipment company ISC will establish a dominant portfolio. ISC is also an affiliate of SKC, the intermediate holding company of SK Group. MERITZ Securities raised ISC's target stock price from the previous 77,000 won to 88,000 won and issued a 'buy' investment recommendation. On the 15th, ISC's closing price was 73,900 won.
On the 16th, Kim Dong-kwan, a researcher at MERITZ Securities, noted, "This year is expected to be the time when ISC's unique portfolio consisting of graphics processing units (GPUs), application-specific integrated circuits (ASICs), and high bandwidth memory (HBM) will be established," adding, "Since it is possible to benefit from differentiation within the artificial intelligence (AI) cycle, we maintain a positive investment outlook."
MERITZ Securities estimates that ISC's revenue for the fourth quarter of last year was 45.4 billion won, with operating income of 12.2 billion won. Compared to the same period last year, revenue grew by 82%, and operating income increased by 395%. Kim explained, "Data center revenue continued to grow from the previous quarter," and noted, "Consumer demand, such as smartphones and PCs, decreased due to seasonal off-peak effects."
Revenue from AI GPUs is expected to increase due to strong demand and the expansion of customers' capacity. As a result, the proportion of AI GPUs in total revenue is likely to exceed 40% for the first time.
Kim noted, "Revenue from neural processing unit (NPU) sockets appears to have occurred due to production sales to new big tech companies in the fourth quarter of last year," and predicted, "In terms of profitability, the increase in labor costs due to performance bonuses and the sluggish memory sector will keep it at the level of the previous quarter."
According to Kim's outlook, ISC is expected to record revenue of 231.9 billion won and operating income of 69.6 billion won this year.
He stated, "This year, the core of ISC's growth is the data center," adding, "The demand for AI GPU sockets driven by the expansion of customers' advanced packaging production capacity will continue." He also mentioned, "The shipment of NPU sockets to new big tech companies will also be reflected," adding that "In the first quarter, shipments of HBM test solutions will begin as the leading company in HBM."