This article was published on May 27, 2025, at 5:37 p.m. on the ChosunBiz MoneyMove site.
SYNIC Solution, a semiconductor design house with annual sales of 170 billion won, is facing a high valuation controversy as it pushes for a listing on the KOSDAQ. After the listing, it unveiled a market price of 110 billion won, which does not even meet its annual sales, but it leveraged its partner company, TSMC, the world's number one foundry market player, for the valuation.
Many have evaluated that a simple comparison is unreasonable due to the significant performance gap between SYNIC Solution and its comparison corporations, TSMC partners. The net profit directly used for the assessment of corporate value fell short even to 1% of the comparison corporation's profit. Although there are assessments that the comparison corporations were inappropriate, the discount rate remained in single digits.
According to the financial investment industry on the 27th, SYNIC Solution submitted a corrected securities registration statement on the 26th, proposing a market capitalization of 110.9 billion won after the listing. This is an estimation based on the upper end of the desired offering price range (4,000 to 4,700 won), and the lower bound market cap is estimated to be 94.4 billion won. The underwriter is DAISHIN SECURITIES.
The number of shares expected to be offered is 3.5 million, accounting for 15% of the total shares planned for listing at 23.6 million 500 thousand shares. A demand forecast for institutional investors will be conducted for five trading days from the 16th to the 20th of next month, determining the final public offering price. If planned, a public subscription for general investors will take place at the end of June, followed by a listing in early July.
Currently, the company has emphasized its connection with SK hynix as a strength. The core of a semiconductor design house lies in helping the semiconductor fabless companies produce their system semiconductors in strict alignment with the characteristics of the foundry process, and SYNIC Solution has been named as a partner company of SK hynix System IC.
In the securities registration statement, SYNIC Solution noted that it is the "only design house partner of SK hynix System IC in South Korea," stating that "it intends to mainly serve semiconductor fabless corporations that wish to outsource production of their system semiconductors using the foundry process of SK hynix System IC."
In fact, SYNIC Solution achieved rapid growth in scale through collaboration with SK hynix System IC. It surpassed 100 billion won in 2021, when operations at SK hynix System IC's Wuxi plant in China began in earnest, and recorded 167.4 billion won last year. The average annual sales growth rate over the past three years has been recorded at 13%.
However, market participants say that the post-listing market capitalization is excessively inflated. When applying the price-to-sales ratio (PSR), which is a method of valuing corporations based on sales, the post-listing market capitalization proposed by SYNIC Solution does not even reach 0.7 times PSR.
Low profitability is cited as the core of the high valuation controversy. Despite generating sales of over 100 billion won, SYNIC Solution's net profit remains at around 1%. Last year, the profit margin slightly rebounded to about 3%, but this was understood to be largely due to foreign exchange gains stemming from the previous year's weak won.
SYNIC Solution's net profit margin in the first quarter of this year fell back to the 1% range. With sales of 31.4 billion won, the net profit was merely 400 million won. In particular, the Financial Supervisory Service required the first quarter's performance to be reflected in the corporate value assessment, leading to a downward adjustment in the public offering price range as last year's performance could not be used.
The comparison corporations chosen by SYNIC Solution and DAISHIN SECURITIES in the valuation process have also fueled market participants' concerns about overvaluation. By adopting only two comparison corporations, Alchip Technologies and Global Unichip, semiconductor design partners of TSMC, they applied an average price-to-earnings ratio (PER) of 30.39 times.
Alchip Technologies and Global Unichip are both Taiwanese semiconductor design houses, listed in the Taiwanese market. Above all, TSMC, the world's number one foundry market share owner, boasts a market capitalization in the trillions, having been selected as members of the so-called design solution alliance considering factors like optimization and security.
SYNIC Solution applied a PER of 30.3 times to a proposed valuation of 167.7 billion won by adding net profits of 4 billion won from the first quarter to the 36 billion won net profit from the second to fourth quarters of last year. In the first quarter, net profits of Alchip Technologies were recorded at 63.9 billion won, while Global Unichip's net profits were 42 billion won.
The company even lowered the discount rate. Despite adopting Taiwanese companies with market capitalizations in the trillions as comparison corporations, it applied only an 8.74% discount compared to the estimated valuation. This falls short of the average lowest discount rate of 23.42% compared to the estimated valuations of general KOSDAQ listed companies as of 2023.
Even ASICLAND, which SYNIC Solution and DAISHIN SECURITIES included in their list of comparison corporations, applied a discount rate of 30.96% to 38.38% compared to the estimated valuation during its listing push in the second half of 2023. ASICLAND is a representative global ASIC design solution company in South Korea, which is a TSMC VCA partner and ARM ADP.
A source from the securities industry noted that "it wouldn't have been easy to find comparison corporations, as many of the partners for TSMC's and Samsung Electronics' foundry design solutions have reported net losses," yet added that "considering the insignificant foundry market share of SK hynix System IC, the discount had to be raised."
Some believe that SYNIC Solution pushed for a high valuation based on the belief in the recent favorable wind in the public offering market, given that its offering scale is small. The public offering market tends to see concentrated demand when the atmosphere is positive, and the average yield of the eight newly listed companies this month has surpassed 100% compared to their public offering prices.