South Korea’s industrial chemical producer Soulbrain Co. is expected to enjoy stellar performance this year on growing demand for its chemical products required for fabricating semiconductors and displays.

Market analysts estimated that Soulbrain, a Kosdaq-listed chemical substance maker, would post an operating profit of 130 billion won ($117 million) this year, a historic high since its inception, as the demand for industrial chemicals from major semiconductors and organic light-emitting diode (OLED) panel makers is expected to continue to grow.

The company’s earnings recovered significantly last year, with its operating profit more than doubling from 48.0 billion won in 2014 to 101.0 billion won. The improvement in the company’s performance is mainly attributed to a growth in sales of etchant, the company’s main product that is a chemical substance used in manufacturing semiconductors and OLED panels. As of 2015 end, the chemicals including the etchant for semiconductors composed 49.5 percent of its total sales and the chemicals for displays took 40 percent.

Soulbrain’s main customers are semiconductor and display panel making giants Samsung Electronics Co., SK Hynix Inc., and LG Display Co. It also provides industrial chemicals to Korea’s major rechargeable battery makers Samsung SDI Co. and SK Innovation Co. As of the end of last year, Soulbrain’s market share in the domestic industrial chemicals market for semiconductors and display panels stood at 81 percent and 39 percent, respectively.

On the back of growing demand for its industrial chemicals, Soulbrain’s shares have rallied this year. Its shares closed 67,300 won on Monday, a whopping 87.2 percent jump from the closing of 35,950 won on January 20. Its shares ended up 0.3 percent, or 200 won, at 67,500 won on Wednesday.

Its main customer Samsung Electronics has started mass production at its semiconductor plant in Xi’an, northwest China, in the second half this year and will embark on the production of 48-layer 3D NAND flash memory chips soon. Because the 3D NAND flash memory chips manufacturing process requires more etching processing steps than does the conventional 24-layer chips, sales of Soulbrain’s etchant is expected surge, said Ryu Young-ho, an analyst at Mirae Asset Daewoo brokerage.

Chinese display panel makers are also expanding their OLED production that will further drive up the demand for industrial chemicals. Soulbrain in May 2014 launched Soulbrain Chongqing Electronics Materials Co. in southwest China and set up another subsidiary Soulbrain Dongguan Electronic Materials Co., southern China, in February this year to meet the growing demand for industrial chemicals by Chinese panel makers.

A Soulbrain official said the company endeavors to take “preemptive” measures for the overseas demand, and its sales have shown a rapid growth since last year, recovering from the dip in 2014. The outlook for Soulbrain is bright as display panel makers are expanding their production amid increasing application of OLED panels, said Lee Jung, an analyst at Eugene Investment & Securities.

By Kim Dae-gi

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