DS Investment & Securities noted on the 25th that Pharmicell, a specialized bio and electronic materials company, is expected to improve its performance due to an expansion of production capacity. The firm maintained its investment opinion of 'buy' and raised the target price from 15,000 won to 16,500 won. Pharmicell's stock price on the previous trading day was 11,570 won.
On this day, Kim Soo-hyun, a Research Institute at DS Investment & Securities, explained, "Pharmicell decided to expand production to reflect the increased demand for hardeners and resins needed for artificial intelligence (AI) accelerators and 5G network equipment."
Earlier, Pharmicell announced that it would invest 30 billion won to build a third plant in Ulsan. This is to respond to large-scale demand for advanced industrial materials for AI and pharmaceutical raw materials. The new plant will be 1.75 times the size of the existing first and second plants, and Pharmicell plans to complete construction of the third plant by September next year.
Research Institute Kim noted that it is not easy to diversify suppliers for high-quality products used in AI accelerators.
He explained, "Pharmicell is the sole supplier for Doosan Electronics Business Group, which provides electronic materials, as it is conducting quality tests for NVIDIA's next-generation AI chip, Rubin. The absence of diversification efforts from Doosan is the reason for Pharmicell's expansion."
According to Research Institute Kim, this factory expansion is intended to prepare for the mass production of NVIDIA's next-generation AI semiconductor, Rubin, which is scheduled for mass production next year, and customized semiconductors (ASIC) for AI that will begin production next month.
Research Institute Kim elaborated, "Due to the increase in orders for ASIC-related mass production and NVIDIA's 'Blackwell Ultra' AI semiconductor production, Pharmicell is currently operating at maximum production capacity in three shifts."
DS Investment & Securities raised its estimates for next year's sales and operating profit to reflect this expansion by 18.2% and 22%, respectively. Estimates are expected to increase depending on the volume of Rubin and the acquisition of additional ASIC customers.