Hanmi Semiconductor
The author is an analyst of NH Investment & Securities. He can be reached at hwdoh@nhqv.com -- Ed.
Amid rising demand for AI, advanced post-fab processes such as HBM and hybrid bonding are becoming increasingly important. As a manufacturer of related bonding equipment, Hanmi is set to benefit from such.
HBM content rising amid higher demand for AI
Adhering to a Buy rating, we raise our TP on Hanmi Semiconductor (Hanmi) from W18,000 to W25,000, reflecting upward adjustments to our earnings estimates in light of increasing equipment investment for high bandwidth memory (HBM3) capacity expansion at memory companies amid growing AI demand. With HBM3 adoption to begin in earnest from 2H23, the firm’s sales of bonding equipment should climb going forward. And, we now believe that its 2024 sales of hybrid bonding-related equipment will reach higher than our previous estimate.
Hanmi’s equipment offerings include TSV/TC Bonder and bonding equipment. TSV/TC Bonder is used to bond semiconductor dies together, and bonding equipment is used to apply HBM to high-performance GPUs (which are essential for AI calculations). Believing that a major client (who made high-quantity orders for HBM1 bonding equipment in the past) is now considering upgrading its equipment to HBM3, we boost our related sales forecast for 2024 from W21.2bn to W71.6bn.
Occupying 95% of the AI computing market, Nvidia’s H100 processor comes equipped with HBM3. HBM3 contains 1,024 data transmission paths (I/O) and secures a data transmission rate of 6.4Gbps per pin, enabling 819GB of data processing per second. The product offers more than 5x faster performance than general DRAM, and also carries a 5x higher price tag. We further note that HBM3 vertically connects 12 DRAM dies using the Through Silicon Vias (TSVs) process. This backdrop bodes well for Hanmi as its equipment attaches memory dies vertically.
Hybrid bonding offers strong growth potential
The fact that hybrid bonding process which vertically stacks memory and logic dies is in application for mass production should bode well for Hanmi’s future earnings. Having named V-Cache as their hybrid bonding technology, AMD and TSMC are been applying it to their latest processors, which offer higher power efficiency and faster operation than conventional structured transistors. As Hanmi is developing equipment used in hybrid bonding processes, it stands to be a beneficiary of this direction.
Hanmi’s sales likely declined q-q in 1Q23 due to reduced investments by related industry players (including TSMC, ASE, and Amkor) amid a semiconductor downcycle. Accordingly, we believe that Hanmi’s 1Q23 sales were held to W58.9bn (-3% q-q), with OP of W20.6bn (+42% q-q). However, we push up our full-year 2023 OP estimate to reflect cost reductions stemming from likely drops in materials and parts prices.