KOSPIElectronic Components007810

Korea Circuit

₩82,700▲ 4.68%2026-10-02 close

Market Cap

₩2T

Turnover

₩77B

Volume

930K

Shares out.

24M

PER

16.5×

PBR

2.9×

EPS

₩3,091

Dividend Yield

0.20%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩100 per share · Prices as of the 2026-10-02 close

Report overview

Memory Module Expansion: Timing of the Recovery

After returning to profit in 2025 on server memory module substrates, Korea Circuit saw operating profit decline for two straight quarters in the first half of 2026, shifting the debate from the pace of recovery to its timing.

1
In 2025 revenue reached KRW 1,509.7bn and operating profit KRW 53.8bn, a turnaround from two consecutive years of operating losses (3.6% operating margin).
2
Quarterly operating profit peaked at KRW 36.1bn in 4Q25, then eased to KRW 26.4bn in 1Q26 and KRW 19.3bn in 2Q26.
3
In a September 3, 2026 report, Meritz Securities attributed the weak consolidated results mainly to subsidiary Interflex, hit by a slowing smartphone market, noting Interflex posted a KRW 5.2bn operating loss in the second quarter.
4
The recovery case hinges on memory module capacity additions ramping up, with SoCAMM shipments to a domestic customer scheduled to begin in the fourth quarter on top of volumes already running for a North American customer.
5
Capex for 2026 is around KRW 110bn, of which KRW 72bn is earmarked for memory module equipment, targeting a roughly 45% increase in P1 monthly capacity from 20,000 sqm to 29,000 sqm by end-2026.

Business structure

Korea Circuit was founded in 1972 to manufacture and sell printed circuit boards and listed on the KOSPI in 1985; its subsidiaries include Interflex, a flexible PCB specialist, and Signetics, a semiconductor packaging firm, and in February 2026 it absorbed the PCB manufacturing division of Terranix.

Its core businesses are HDI boards for smartphones and package substrates for memory modules, supplied to leading global manufacturers. Within HDI, the center of gravity has shifted rapidly from mobile to servers.

Memory module substrates rose from 35% of that revenue in 2024 to 47% in 2025 and are projected to reach around 65% in 2026, and NH Investment & Securities noted in a March 2026 report that build-up boards for smartphones earn only break-even level margins while module substrates deliver double-digit margins.

The package segment mix is changing as well. Daishin Securities said in a February 2026 report that flip-chip products (FC BGA, FC CSP, FC BOC) grew from 68% of semiconductor package revenue in 2024 to 74% in 2025 and an estimated 80% in 2026.

Broadcom is the main FC-BGA customer, accounting for roughly 90% of P3 plant sales, and the product mix has broadened from communication chips, set-top boxes and Wi-Fi chips into 8-10 layer boards, with 16-layer products at the sampling stage.

The customer base spans domestic memory makers, smartphone and display set makers and overseas fabless firms, yet individual product lines carry high single-customer concentration. Domestically the company competes with substrate peers such as Simmtech, Daeduck Electronics and TLB, whose product ranges overlap.

Of consolidated equity of KRW 790.6bn, non-controlling interests account for KRW 350.8bn, so swings in subsidiary earnings create a meaningful gap between consolidated net profit and profit attributable to owners.

Earnings trend

Quarterly revenue · Operating profit

₩331.3B₩6.2B25Q2₩375.7B₩13.3B25Q3₩448.1B₩36.1B25Q4₩419.9B₩26.4B26Q1₩407.2B₩19.3B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩1.6T₩99.2B2022₩1.3T-₩32.1B2023₩1.4T-₩33.2B2024₩1.5T₩53.8B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩331.3B	₩6.2B	1.9%
2025Q3	₩375.7B	₩13.3B	3.5%
2025Q4	₩448.1B	₩36.1B	8.0%
2026Q1	₩419.9B	₩26.4B	6.3%
2026Q2	₩407.2B	₩19.3B	4.7%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩1.6T	₩99.2B	₩68.6B	6.2%	14.4%	72.1%
2023	₩1.3T	-₩32.1B	-₩36.6B	−2.4%	−8.5%	74.2%
2024	₩1.4T	-₩33.2B	-₩125.9B	−2.4%	−33.2%	84.3%
2025	₩1.5T	₩53.8B	₩47.3B	3.6%	10.7%	76.1%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-09-04

Earnings analysis

The earnings path has been distinctly cyclical.

From revenue of KRW 1,596.9bn and operating profit of KRW 99.2bn (6.2% margin) in 2022, results fell sharply to revenue of KRW 1,332.2bn and an operating loss of KRW 32.1bn in 2023, and although 2024 revenue recovered to KRW 1,407.0bn, the company still posted a KRW 33.2bn operating loss and a KRW 125.9bn net loss attributable to owners.

In 2025 it turned around, with revenue of KRW 1,509.7bn (up 7.3%), operating profit of KRW 53.8bn (3.6% margin) and net profit attributable to owners of KRW 47.3bn.

Quarterly momentum built through the year: revenue and operating profit rose from KRW 331.3bn and KRW 6.2bn in 2Q25 to KRW 375.7bn and KRW 13.3bn in 3Q25, then KRW 448.1bn and KRW 36.1bn in 4Q25.

SK Securities noted in a February 2026 report that fourth-quarter operating profit came in slightly below consensus because of roughly KRW 7bn in one-off costs, including inventory write-offs and one-time labor expenses.

In 2026, revenue and profit both slipped, to KRW 419.9bn and KRW 26.4bn (6.3% margin) in the first quarter and KRW 407.2bn and KRW 19.3bn (4.7%) in the second.

Meritz Securities said in its September 3, 2026 report that even on a standalone basis operating profit missed its estimate due to shipment delays from raw-material supply issues and a slower recovery in sales to a key package customer, though strong memory conditions lifted memory module revenue sharply and preserved year-on-year growth.

Over the latest four quarters (3Q25-2Q26), revenue totaled KRW 1,650.9bn, operating profit KRW 95.1bn and net profit attributable to owners KRW 85.0bn, already above the full-year 2025 levels.

That said, 2025 operating cash flow of KRW 39.1bn was below the KRW 99.5bn of 2024, showing that profit improvement did not translate directly into cash generation, while the debt-to-equity ratio fell from 84.3% in 2024 to 76.1% in 2025.

Industry analysis

Substrate industry conditions are tightly linked to AI data center investment and the memory cycle.

Daishin Securities argued in a February 2026 report that despite possible softness in IT device demand, strong data center and server memory demand combined with larger board area and higher layer counts from rising memory specifications had put memory module substrates in a phase of simultaneous volume and price growth.

Meritz Securities said in an April 2026 report that from the second quarter, stabilizing gold prices, a persistently weak won and package substrate price increases would leave Korean substrate makers on broadly similar industry trajectories.

In practice, however, cost and timing variables such as raw-material supply and shipment delays played out differently company by company in the first half.

In its September 3, 2026 report, Meritz Securities observed that unlike other PCB makers benefiting from the upturn, Korea Circuit had seen relatively weak earnings and share performance.

On competitive positioning, the same house projected in a March 2026 report that FC-BGA utilization would rise from 55% in 2025 to 70% in 2026 and 85% in 2027.

It also identified FC-BGA and SoCAMM-related memory module and low-power DRAM substrates as the twin pillars of the 2027 substrate upcycle, highlighting the company as the only Korean supplier able to serve both.

By contrast, the smartphone-centric flexible PCB market remains in a demand lull, so server strength and mobile weakness continue to offset each other within the same group.

Outlook

The most recent published outlook combines lower estimates with a delayed recovery.

In its September 3, 2026 report, Meritz Securities cut its 2026 consolidated forecasts to revenue of KRW 1,705.3bn and operating profit of KRW 94.5bn, down 4.5% and 32.7% respectively, and lowered its 2027 operating profit estimate by 21.7% from KRW 222.1bn to KRW 173.8bn.

It forecast third-quarter consolidated revenue of KRW 421.3bn, up 12.2% year on year, and operating profit of KRW 15.7bn, up 43.4%. The same report expected earnings recovery to begin in earnest from the fourth quarter as memory module capacity additions, SoCAMM shipments and ABF substrate price increases coincide.

Its estimates put memory module revenue at KRW 236.6bn in 2025, KRW 431.5bn in 2026 and KRW 587.8bn in 2027, with SoCAMM revenue rising from KRW 5.0bn in 2025 to KRW 62.0bn in 2026 and KRW 176.3bn in 2027. Confirmed capacity facts support the direction.

On January 20, 2026 the company disclosed a KRW 99.3bn facility expansion investment to address memory semiconductor and advanced packaging markets, with an investment period running to December 31, 2026.

On the new-product front, an April 2026 report noted the company was working on high-layer, large-area AI networking FC-BGA of 10-14 layers for Broadcom, versus 6-8 layers previously.

The key question for the second half is therefore how far incremental capacity and new items offset Interflex's weakness and raw-material cost pressure.

Valuation

PER

16.5×

PBR

2.9×

ROE

20.3%

EPS

₩3,091

BPS

₩17,886

Dividend per share

₩100

It is worth noting first that during the operating losses of 2023-2024, earnings-based multiples could not meaningfully be calculated, and comparison on an earnings basis only became possible after the 2025 turnaround.

A price-to-earnings multiple based on the latest four quarters is computable, but that profit pool includes the strong fourth quarter of 2025 and therefore lags the more recent trend of softening quarterly profit.

On a price-to-book basis, both our own calculation and the Korea Exchange disclosure place the stock at a premium to net assets, and given that non-controlling interests make up nearly half of consolidated equity, multiples computed on owners' equity and owners' earnings screen higher than those on a fully consolidated basis.

Dividends have resumed but remain small, leaving the dividend yield well below the market average.

For reference, Meritz Securities said in a March 2026 report that the shares traded at a discount to domestic peers, citing Bloomberg consensus 2026 estimated price-to-earnings multiples of 28.2 times for Daeduck Electronics, 21.6 times for TLB and 21.7 times for Simmtech.

The same house said in its September 3, 2026 report that it had cut its fair value to KRW 90,000 from KRW 170,000 to reflect lower earnings estimates while maintaining a Buy rating.

PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-09-04

Bull factors

Mix shift toward server memory modules

Memory module substrates rose from 35% of the relevant revenue in 2024 to 47% in 2025 and are projected near 65% in 2026, with analysis indicating smartphone build-up boards earn break-even margins while module substrates deliver double-digit margins.

That mix shift underpinned the move of quarterly revenue above the KRW 400bn mark from the second half of 2025. As the product mix moves upmarket, there is more room for operating margin improvement at the same utilization level.

The extent of that improvement, however, can vary quarter to quarter with raw-material prices and exchange rates.

Serving both SoCAMM and FC-BGA

In its September 3, 2026 report, Meritz Securities judged that medium- to long-term growth potential stands out more precisely because the company is the only Korean substrate maker able to address both SoCAMM and ABF products.

The same report estimates SoCAMM revenue rising from KRW 5.0bn in 2025 to KRW 62.0bn in 2026 and KRW 176.3bn in 2027. Volumes for a North American customer are already in mass production, while shipments to a domestic customer are scheduled to start in the fourth quarter. If both pillars run together, dependence on any single end-demand driver would be diluted.

Front-loaded capacity and a firmer balance sheet

Of about KRW 110bn in 2026 capex, KRW 72bn is allocated to memory module equipment, lifting P1 monthly capacity roughly 45% from 20,000 sqm to 29,000 sqm by year-end.

Daishin Securities noted in a January 2026 report that memory module lines were estimated to be running at full utilization and that the investment focused on equipment with existing mass-production experience, allowing faster yield stabilization and capacity addition.

On the balance sheet, the debt-to-equity ratio fell from 84.3% in 2024 to 76.1% in 2025. Whether the added capacity converts into revenue must be verified in the data from the fourth quarter onward.

Bear factors

Two straight quarters of profit decline

After KRW 36.1bn of operating profit in 4Q25, profit fell to KRW 26.4bn in 1Q26 and KRW 19.3bn in 2Q26, while revenue slipped from KRW 419.9bn to KRW 407.2bn. The operating margin eased from 8.0% to 6.3% and then 4.7%.

Even on a standalone basis, shipment delays from raw-material supply issues and a slow sales recovery at a key package customer were cited as causes. If the rebound depends on specific quarterly events, earnings volatility may persist for a while.

Losses at subsidiary Interflex

The gap between weak consolidated results and better standalone figures was attributed to Interflex, hurt by the smartphone slowdown, with the unit posting a KRW 5.2bn operating loss in 2Q26.

With non-controlling interests of KRW 350.8bn in consolidated equity, subsidiary earnings feed directly into profit attributable to owners. If mobile demand stays soft, parent-level improvement may keep getting diluted at the consolidated level. Subsidiary-level results should be checked separately in the quarterly filings.

Lower estimates and new-product timing risk

In its September 3, 2026 report, Meritz Securities cut its 2026 consolidated operating profit forecast by 32.7% to KRW 94.5bn and its 2027 figure by 21.7% to KRW 173.8bn. FC-BGA for Broadcom's AI data center applications has been described as revenue that lands only once qualification testing is passed.

For new items, a single quarter of slippage in qualification or ramp can reshape the annual trajectory. Depreciation from the expansion also lands ahead of the related revenue recognition.

Risk factors

Input costs and FX

Substrate costs directly reflect metals such as gold and copper as well as copper-clad laminate prices.

An April 2026 report expected stabilizing gold prices, a persistently weak won and package substrate price increases to align from the second quarter, but this was a forecast and the actual cost and currency path may differ. In practice, shipment delays tied to raw-material supply weighed on second-quarter 2026 profit. A shift toward a stronger won could squeeze margins given the export-heavy revenue base.

Customer and product concentration

Analysis indicates Broadcom is the main FC-BGA customer, accounting for roughly 90% of P3 plant sales. Memory module substrates likewise depend on demand from a small group of domestic and overseas memory makers.

Inventory adjustments or design changes at a single customer flow straight into quarterly results, and customer inventory digestion was cited as a factor behind lower orders in 1Q26. Progress on broadening applications should be tracked through periodic filings and analyst reports.

Cycle and cash flow

As two consecutive years of operating losses in 2023-2024 show, this business swings widely with the end-market cycle. Even as profit recovered in 2025, operating cash flow of KRW 39.1bn came in below the KRW 99.5bn of 2024.

With expansion under way, simultaneous increases in working capital and capital spending can constrain cash headroom. Should AI data center investment decelerate, the payback period on the added capacity could lengthen.

What to watch next

Late October to mid-November 2026
Third-quarter results. Meritz Securities forecast consolidated revenue of KRW 421.3bn and operating profit of KRW 15.7bn for the quarter. This is the quarter to check whether the operating margin, down for two straight quarters, actually bottoms.
During 4Q 2026
The start of SoCAMM shipments to a domestic customer and the full ramp of memory module capacity are the key variables in the recovery case. Confirm the shipment start date and initial volumes through disclosures and media reports.
December 31, 2026
This is the end of the investment period for the KRW 99.3bn facility expansion disclosed on January 20, 2026. Check whether it was fully executed, whether any amended disclosures follow, and whether the P1 monthly capacity target of 29,000 sqm is met.
January-February 2027
Full-year 2026 results and the dividend decision. This will show where annual operating profit lands versus the KRW 94.5bn forecast from Meritz Securities, along with the size of the fourth-quarter recovery and any change in dividend policy.
4Q 2026 to 1H 2027
Whether the 10-14 layer, high-layer and large-area AI networking FC-BGA for Broadcom passes qualification and moves to mass production. Any slippage in qualification timing would shift when the related revenue is recognized in 2027.

Overall view

Korea Circuit moved from profitability in 2022 through two consecutive years of operating losses in 2023-2024 before returning to profit in 2025 with revenue of KRW 1,509.7bn and operating profit of KRW 53.8bn.

The driver of that recovery was a mix shift toward server memory module substrates, and quarterly results improved markedly to KRW 36.1bn of operating profit in 4Q25.

Profit then fell for two straight quarters, to KRW 26.4bn in 1Q26 and KRW 19.3bn in 2Q26, with a KRW 5.2bn second-quarter operating loss at subsidiary Interflex, shipment delays from raw-material supply issues and a slow sales recovery at a key package customer cited as the causes.

In its September 3, 2026 report, Meritz Securities said the soft trend would persist through the third quarter but that recovery would begin in earnest from the fourth quarter as memory module capacity additions, SoCAMM shipments and ABF substrate price increases converge, while cutting its fair value to KRW 90,000 from KRW 170,000 and maintaining a Buy rating.

The bull case rests on the higher-value mix created by expansion and new products; the bear case rests on the persistence of the profit slowdown, the drag from the mobile subsidiary and new-product timing risk.

On confirmed financials alone, the latest four quarters combined exceed the full-year 2025 figures even as the quarterly trend declines, leaving the signals mixed.

A sensible approach is to check two verifiable data points in sequence, third-quarter results and the start of fourth-quarter SoCAMM shipments; this report is for information purposes and does not contain any buy or sell opinion.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

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Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.