Samsung's Investment Seeds Ignite Growth Cycle in Semiconductor Value Chain

Hansol Chemical Benefits from Increased Demand for Hydrogen Peroxide and Precursors
Secondary Battery Material Sector Also a New Growth Driver

Samsung has decided to newly invest 240 trillion KRW over three years until 2023 in strategic businesses such as semiconductors and bio. It will invest 200 trillion KRW in the semiconductor sector and 40 trillion KRW in bio, 5G, and robotics fields. Of the total investment amount, 180 trillion KRW will be invested domestically. Samsung Electronics will focus on firmly establishing its absolute dominance in the global memory semiconductor market and laying the foundation to leap to the world’s number one position by expanding investment in the non-memory semiconductor sector. The significance lies in executing the non-memory semiconductor investment centered on foundry 3 to 4 years earlier than the existing plan.

Asia Economy reviews Hansol Chemical and Unisem’s business structures and growth strategies, which are expected to benefit from Samsung Electronics’ semiconductor sector investment decision, and gauges their future growth potential.

[Asia Economy Reporter Park Hyungsoo] As Samsung Electronics plans large-scale investment in the non-memory semiconductor (system semiconductor) sector, there is a forecast that Hansol Chemical will benefit.

Samsung Electronics is advancing the execution of non-memory semiconductor investment centered on foundry ahead of the original plan. Over three years until 2023, Samsung Electronics’ non-memory semiconductor investment scale will reach an average of 1.46 trillion KRW per year. This is more than double the average annual investment scale of 670 billion KRW over the three years from 2018 to 2020. Samsung Electronics expects to increase the profit ratio of the relatively less volatile non-memory semiconductor sector.

Kim Dongwon, a researcher at KB Securities, analyzed, "Samsung Electronics will begin full-scale mass production of 3-nanometer (nm) applying a new structure from next year," and added, "It appears to be a market share expansion strategy to secure competitive advantage over TSMC and Intel."

Hansol Chemical produces hydrogen peroxide (H2O2), precursors, quantum dot (QD) materials, and more. Hydrogen peroxide, an eco-friendly oxidizer, is widely used in various fields such as semiconductors, displays, paper manufacturing, textiles, and water treatment. The demand for ultra-high purity hydrogen peroxide is steadily increasing due to the expansion of semiconductor facilities by client companies. Precursors are used in semiconductor processes to form semiconductor thin films. Demand for precursors is increasing due to semiconductor miniaturization and the rise of three-dimensional structures. Hansol Chemical sells to major semiconductor companies including Samsung Electronics, SK Hynix, and TSMC. Hansol Chemical is expanding its market by developing new precursors required in not only semiconductors but also display and solar power industries. Demand for hydrogen peroxide and precursors is increasing in the non-memory semiconductor sector.

KB Securities estimated that Hansol Chemical’s non-memory material sales supplied to Samsung Electronics and TSMC will record 75.6 billion KRW this year and 101.7 billion KRW next year. This represents increases of 30.7% and 34.5% respectively compared to the previous year. Considering that sales were 48.8 billion KRW in 2019, it is judged that sales will more than double in three years. Since this estimate was made before Samsung Electronics’ large-scale investment plan announcement, non-memory material sales are likely to increase even faster.

Hansol Chemical recorded sales of 187.3 billion KRW and operating profit of 53.9 billion KRW in the second quarter of this year. These figures increased by 26% and 39% respectively compared to the same period last year. Semiconductor-grade hydrogen peroxide and precursors led the improvement in second-quarter performance.

While the semiconductor material business division is growing steadily, Hansol Chemical is also actively fostering its secondary battery material division. Last year, it launched a binder for secondary battery anodes. Silicon anode materials are necessary for improving energy density and fast charging in electric vehicle secondary batteries. Hansol Chemical succeeded in domestic production of secondary battery binders, which were monopolized by Japanese companies. Although the market share among major customers is about 30% this year, it is expected to expand to 50% next year based on price and technological competitiveness. The proportion of secondary battery material sales in Hansol Chemical’s total sales could increase from 3% this year to 6% next year.

On the 10th of last month, Hansol Chemical disclosed its investment plan for mass production facilities of silicon anode materials for secondary batteries. The first phase of investment will establish facilities producing 1,500 tons annually. It will invest 85 billion KRW to operate 750 tons of production facilities by the end of next year as a priority. In the long term, it can expand up to 10,000 tons. The global market size of silicon anode materials, which are attracting attention as next-generation secondary battery materials, is expected to grow at an average annual rate of about 50% until 2030.

So Hyuncheol, a researcher at Shinhan Financial Investment, explained, "Samsung SDI plans to begin mass production of automotive batteries equipped with silicon anode materials in the second half of next year," and added, "Hansol Chemical will establish itself as a full-fledged secondary battery material company by expanding its business from anode binders to silicon anode materials."

Hansol Chemical maintains excellent financial stability while continuing investments for growth. Since 2019, net borrowings have decreased due to expanded operating cash flow and adjusted investments. Despite investments in electronic materials-related research and production buildings and facilities, and the acquisition of the special gas business of Hanamaterials last year, net borrowings decreased due to expanded operating cash flow, land sales in Bupyeong, Incheon, and the sale of shares in Hansol C&P. In the first quarter of this year, despite increased working capital burden, net borrowings continued to decrease due to steady operating cash flow and the sale of remaining land in Bupyeong, Incheon. Net borrowings decreased from 81 billion KRW at the end of last year to 74.6 billion KRW at the end of the second quarter this year.

Korea Ratings forecasted that Hansol Chemical’s sales of semiconductor-grade hydrogen peroxide, which has a high selling price, will continue to increase for the time being in line with Samsung Electronics’ semiconductor facility expansion plans. The electronic materials division is also expected to continue growing based on increased demand for thin film materials due to process miniaturization. Furthermore, considering the scale of cash assets, additional collateral capacity of held assets, unused credit limits from financial institutions, and excellent external creditworthiness, liquidity response capability was evaluated as excellent.

This content was produced with the assistance of AI translation services.