Shares of LEENO Industrial, a semiconductor test socket maker, have continued a steep rise this year. On the 22nd, they closed at 120,200 won, up 1.43% from the previous transaction day. From 64,900 won at the start of the year, they have climbed 85.2%, settling at No. 6 in KOSDAQ market capitalization.
Expectations for an improvement in the global semiconductor cycle on the back of rising artificial intelligence (AI) demand appear to have been reflected in the stock as the outlook for growth in the test socket market has strengthened. According to the industry, the current global semiconductor test socket market is about 3 trillion won, with an annual growth rate of around 5%–6%.
Park Sung-soon, a researcher at the Korea IR Association, said, "Sockets are a key component that have a decisive impact on Production yield, even though their share of manufacturing cost is low, making this a representative high value-added market with low price resistance," and noted, "Over the past 25 years, there have been only three instances of market contraction: the 2001 dot-com bubble burst, the 2008–2009 global financial crisis, and the 2023 semiconductor downcycle."
◇ Record operating profit of 177 billion won last year… test socket revenue up 42%
LEENO Industrial posted its best results since its founding last year. On a consolidation basis, revenue rose 33.9% from a year earlier to 372.5 billion won, and operating profit increased 42.5% to 177 billion won.
The operating margin was 47.5%, up 2.9 percentage points from a year earlier, marking an unusually high level of profitability for the industry. A vertically internalized structure that performs all processes in-house—from design to precision machining, plating, assembly, and final inspection—is cited as the backdrop.
The company's core businesses are test socket and pogo pin manufacturing. In last year's revenue mix, test sockets accounted for 243.9 billion won, or 65.5% of the total, up 42% year over year, driving earnings growth. Pogo pins came to 87.1 billion won, a 23.4% share, up 15.9% from a year earlier.
Test sockets and pogo pins are consumable parts that connect inspection equipment and chips, and they wear out with repeated use, requiring periodic replacement. Even if mass production volumes decrease, demand for research and development (R&D) sockets for new product development continues to emerge.
◇ Growing test market with the adoption of WMCM… rising demand for "customized sockets"
The securities industry projects LEENO Industrial's revenue this year at 410 billion–450 billion won and operating profit at 190 billion–210 billion won.
This comes as TSMC is reportedly planning to expand its next-generation packaging process, WMCM (wafer-level multi-chip module), to 60,000 wafers per month by the end of the year and to more than 120,000 wafers per month next year. The expansion of this process is expected to drive increased demand for test sockets and higher unit prices.
WMCM separates multiple chips into chiplets and then integrates them at the wafer stage, requiring verification of both the connection status and individual chip functions. As a result, the number of I/O terminals increases by 15%–20% compared with existing levels, and thinner, more precise test pins are required. LEENO Industrial has the technology to manufacture 0.075 mm-class test pins that can handle this ultra-fine pitch (pin spacing).
It also benefits LEENO Industrial that demand for R&D sockets arises first at the initial stage of introducing a new process. R&D sockets are produced in small quantities across multiple models for repeated testing before chip designs are finalized, and they are known to have higher margins than those for mass production. LEENO Industrial is building a structure in which it secures initial volumes based on demand at the development stage from about 1,000 client companies and then naturally moves into the mass production stage.
Moves by clients to expand in-house chip production are also positive. Last year, Apple and TSMC's combined share of LEENO Industrial's revenue increased from 26% to 33%. Revenue from Apple rose 63% year over year, and revenue from TSMC increased 80%.
In particular, TSMC's revenue structure is shifting from smartphones to high-performance computing (HPC) and application-specific integrated circuits (ASICs). This reflects the impact of global big tech companies expanding in-house ASIC production. Because ASICs have architectures optimized for specific algorithms, test sockets also require highly customized designs.
◇ Investing 200 billion won in equipment amid intensifying market share competition… "doubling production capacity"
LEENO Industrial is also ramping up production capacity to meet rising demand. It is investing about 200 billion won to build a new plant in Busan Eco Delta City, with completion slated for November this year. Equipment transfer and stabilization are expected to take about two to three years. Once the plant is fully operational, production capacity is projected to expand from about 450 billion won currently to about 950 billion won.
There are variables. Global smartphone shipments this year are expected to decline 10%–12% from a year earlier.
However, the industry expects the impact on LEENO Industrial to be limited. This is because its supply is concentrated in premium product lines centered on Qualcomm and Apple. Unlike budget models, the premium smartphone market is expected to maintain single-digit growth. LEENO Industrial is also diversifying its customer base, with Qualcomm's share of last year's revenue reduced from 28% to 22%.
Over the mid to long term, changes in the competitive landscape are cited as a variable. According to the industry, LEENO Industrial's share of the global test socket market was about 12% last year, down slightly from about 14% the previous year. This is interpreted as reflecting the slowdown in the smartphone sector.
Key competitors include ISC and Japan's Yamaichi and Yokowo. An industry official said, "In this market, competition among the top 1st to 10th companies is intense," adding, "If the No. 1 share is around 15%, the rest are separated by decimal points."
In particular, ISC's rapid rise stands out. ISC is said to have lifted its global test socket market share last year from single digits the year before to around 10%. The official said, "Like LEENO Industrial, ISC has a structure that performs all processes in-house," adding, "Its operating margin in the first quarter of this year is also expected to be around 35%."
LEENO Industrial did not respond to related inquiries from ChosunBiz.