[Edaily Reporter Kim Hyung-il ] HYUNDAI MOTOR SECURITIES issued a “Buy” rating and a target price of 23,000 won for MKElectron(033160), citing steadily increasing demand for wire bonding—a semiconductor material—from both its domestic standalone operations and its Chinese subsidiary. In particular, the firm highlighted revenue growth driven by SOCAMM (a substrate for memory semiconductor modules) and expanded shipments to China, as well as the company’s attractive valuation.

On the 2nd, Kim Jong-bae, an analyst at HYUNDAI MOTOR SECURITIES, stated, “Demand for wire bonding—a semiconductor material—from the company’s domestic operations and its Chinese subsidiary continues to rise, and volumes of solder balls and palladium alloys (Pd alloys) for semiconductors are also growing steadily.” He added, “While earnings may experience short-term volatility due to external factors, this is expected to be ultimately offset by the increase in volume.”

HYUNDAI MOTOR SECURITIES projected MKElectron’s semiconductor division revenue for this year at 1.7764 trillion won, a 60.9% increase from the previous year. Operating profit is expected to rise 163.2% to 81.3 billion won, with an operating profit margin forecast at 4.6%.

Analysts noted that demand volumes are growing faster than previously anticipated. Domestic gold wire volumes in the second quarter increased by 12–13% compared to the previous quarter, and this growth trend is expected to continue at a rate of 6–7% in the third quarter. They forecast that the growth in wire bonding volumes will accelerate again starting at the end of the third quarter or in the fourth quarter, as SoCAMM2 volumes are fully reflected.

However, the firm noted that earnings growth in the third quarter may be limited despite robust volume growth due to high volatility in external factors such as exchange rates and gold prices. It added that attention should be paid to the trend of strong fundamental improvement as volume growth in the fourth quarter offsets these effects.

The rapid growth of the Chinese subsidiary was also cited as a key growth driver. The report explained that as Chinese memory companies such as Changxin Memory Technology (CXMT) and Yangtze Memory Technology (YMTC) continue to post strong earnings, packaging volumes at Chinese semiconductor back-end (OSAT) companies are also increasing rapidly. MKElectron is seeing a surge in wire bonding orders based on its high market share in China, and analysis indicates that it is recording volume growth in the mid-to-high single-digit range quarter-over-quarter.

Growth in high-margin materials was also anticipated. Volume of Pd Alloy more than doubled compared to the first half of the year, and Solder Ball is expected to grow by more than 20% beyond the previous forecast due to stronger-than-expected demand. MKElectron is preparing for mass production of its Micro Solder Ball (MSB) business in 2028, so profitability is expected to improve not only through increased volume of existing legacy products but also through the securing of high-margin materials in the future.

Analyst Kim stated, “Given China’s high profitability, future volume growth for the Chinese market will serve as a key growth driver for the company,” adding, “We recommend actively increasing exposure, taking into account both the momentum from SoCAMM and the Chinese market, as well as the company’s attractive valuation.”