They apply a "silent pressure," saying that because orders have increased in the AI tailwind and sales have risen, we should concede some margin. With supply chain jitters, materials prices are rising and labor costs are a burden, but the supply price itself hasn't changed much. (Senior official at a semiconductor materials, parts and equipment company)
What's called "price beating down" by domestic conglomerates is nothing new. Even now, when revenue is being maximized, that stance hasn't changed much. After AI demand surged, foreign clients became more gentlemanly in their approach, though. (Marketing executive at a semiconductor materials, parts and equipment company)
On the 13th, the industry said that Samsung Electronics and SK hynix are logging record profitability in the AI memory supercycle (boom), but among domestic materials, parts and equipment (MPE) partners there is talk that "work has increased, but margins haven't changed much." Companies that make hard-to-substitute products, such as high-bandwidth memory (HBM) bottleneck equipment or AI Semiconductor test parts, are maintaining high profitability, but materials and parts firms say the benefit they feel is limited because, despite higher materials and supplies and labor costs, the price negotiation structure with customers hasn't changed much.
Market research firm Counterpoint Research estimated the average operating margin of Samsung Electronics, SK hynix and Micron in the second quarter of this year at around 75% to 80%. Micron recently achieved a quarterly operating margin of 81%. Analysts say Samsung Electronics and SK hynix will show similar levels.
◇ Even with strong results for memory leaders, partner profitability improves only slightly
Profitability at domestic MPE firms lags far behind memory giants. Based on FnGuide consensus, second-quarter operating margins this year are estimated at 48.5% for HANMI Semiconductor, 20.6% for Eugene Technology, 16.9% for Soulbrain, 11.3% for Wonik IPS, and 9.3% for Jusung Engineering. Companies like HANMI Semiconductor, which hold bottleneck equipment such as HBM thermal compression (TC) bonders, are maintaining margins near 50%, but excluding these, many Samsung Electronics and SK hynix partners are seen stuck in the 10% to 20% range.
In the MPE industry, the view is that while the trickle-down effect of this semiconductor boom isn't nonexistent, its speed and breadth are more limited than in the past. Partners of memory giants say it is hard to protect margin rates through ordering, inspection, materials and supplies costs, and supply price coordination.
A semiconductor industry official said, "The higher the reliance on Samsung Electronics and SK hynix, the greater the pressure to cut margins in negotiations," adding, "If talks are held in an atmosphere where the increase in orders from higher factory utilization is treated like a benefit, partners have no choice but to be dragged along." The official also said, "Even as the scale of results for memory corporations grows, partners' profitability isn't changing much."
◇ Strong price pressure on materials and parts: "We don't really feel the supercycle"
Price pressure is said to be more pronounced in materials and parts than in equipment. Equipment often has a set per-unit price, making it harder to directly lower unit prices as with mass consumables. Materials and parts, by contrast, are delivered repeatedly in quantity units and are more susceptible to customer pricing power.
A semiconductor department professor who requested anonymity said, "Equipment costs in the hundreds of millions of won per unit, so buying more may bring discounts, but it isn't easy to directly cut the unit price," adding, "Materials and parts are a volume game, so price pressure will be more severe." A semiconductor industry official also said, "Materials prices are rising and there's more work, but supply prices haven't changed much—complaints are heard more from materials and parts firms than from equipment corporations."
For example, Soulbrain gets about 83% of its sales from semiconductor materials and counts Samsung Electronics and SK hynix as major clients. As clients' factory utilization rises, demand increases for consumable materials such as etchants and chemical mechanical planarization (CMP) slurry. Soulbrain's second-quarter consensus is sales of 267.8 billion won and operating profit of 45.3 billion won. The operating margin is expected at 16.9%. The memory market is clearly better than last year, but compared with last year's annual operating margin of 14.46%, the improvement is modest.
Dongjin Semichem produces photoresist (PR, a photosensitive liquid that reacts to light when etching circuit patterns on a wafer) and thinner (a chemical used to dilute and clean photoresist), among others. In the first quarter, Dongjin Semichem posted sales of 328.086 billion won and operating profit of 66.593 billion won. Sales rose 13.2% and operating profit 39.4% from a year earlier. Although expanded photoresist sales and higher average selling prices played a role, the operating margin was 20.3%, up only 3.8 percentage points from 16.5% a year earlier.
Wonik QnC, which makes quartz (process components made of high-purity silica) consumable parts for semiconductor processes, recorded first-quarter sales of 256.2 billion won and operating profit of 21.9 billion won. Compared with 231.4 billion won in sales and 19.1 billion won in operating profit a year earlier, sales rose 10.7% and operating profit 14.6%. But the operating margin barely moved, from 8.3% to 8.5%.
A researcher at a market research firm said, "Unlike memory giants, MPE corporations are less robust and thus more exposed to global supply chain instability and rising materials and supplies prices."
◇ "Margins are at unprecedented levels, but partners' rising costs are being ignored"
Overseas MPE corporations tend to be more profitable than domestic ones. Lam Research posted sales of $5.841 billion (about 882.3 billion won) and an operating margin of 35.0% in the third quarter of fiscal year 2026 (Jan.–Mar. 2026). During the period, 23% of Lam Research's total sales came from Korea.
Tokyo Electron posted sales of 711.8 billion yen (about 665.3 billion won) and operating profit of 205.6 billion yen (about 192.2 billion won) in the fourth quarter of fiscal year 2026 (Jan.–Mar. 2026). The operating margin was 28.9%. Tokyo Electron said profitability improved as it secured high shares in key memory processes such as DRAM capacitors and HBM interconnects.
A senior official at an MPE corporation said, "It's hard to say Samsung Electronics and SK hynix are in the wrong, but there are certainly situations where partners feel, 'Why are we the only ones shouldering the expense?' In the 2017–2018 memory boom, even though profits were smaller than now, there was a mood of building the ecosystem and pursuing mutual growth with partners. Now, even though memory giants' margins are at unprecedented levels, the stance of sharing partners' cost increases has actually weakened."