Soulbrain
The author is an analyst for NH Investment & Securities. He can be reached at hwdoh@nhqv.com -- Ed.
A key client’s GAA process is expected to reach the mass production stage in 2024, in turn benefiting Soulbrain. Also to benefit its earnings is an expected improvement in semiconductor supply/demand conditions from 2H23
Expect mass production of GAA architecture in 2024
Reiterating a Buy rating, we raise our TP on Soulbrain from W270,000 to W300,000, following a change the base year for our TP calculation from 2023 to 2024. Mass production of a key customer’s 3nm foundry process is to benefit Soulbrain’s earnings from 2024.
We point out that an etchant developed by Soulbrain is being used in 3nm Gate All Around (GAA) processes. In detail, the GAA structure applies a process of etching the Si and SiGe stack with a fin array, and then removes the SiGe from the fins by isotropic etching to leave wires or sheets. Through this method, a precise etching process is required in order to selectively remove SiGe and Si.
Semiconductor supply/demand conditions to improve from 2H23
We expect Soulbrain’s 2Q23 earnings to arrive tepid, believing that production cuts at customers intensified q-q. Unfavorable display market conditions have also likely dampened the firm’s 2Q23 performance. Absent of a Chinese smartphone market rebound, Soulbrain’s TG sales are unlikely to rebound for now. Given that a large portion of its overall sales is represented by LCDs, the negative impact of customer capacity reduction looks to be continuing.
But from 2H23, semiconductor supply/demand conditions are expected to improve, ushering in an earnings recovery. Demand for stockpiling memory from some customers is starting again in response to recent production cuts. The long-term benefit to Soulbrain is that 3D NAND is expected to increase its density in the direction of accelerating pitch scaling and slowing the rate of increasing the number of stacks beyond 200 layers.