Undervalued no more: Jusung Engineering to spin off chip business

Jusung Engineering, the first-generation chipmaking equipment firm in Korea, has decided to spin off its lucrative semiconductor equipment business into a new entity with hopes of elevating its undervalued market cap.

Noting how the company has been suffering from undervaluation, Hwang Chul-ju, the founder and chairman, said the latest decision will boost the value of its chip business, the No. 1 at home.

“The company is just way too undervalued when it has proprietary technologies used in making DRAM memory, NAND flash and logic chips, and can support the industry for the next 100 years,” Hwang said in a press briefing held in Jusung Engineering R&D Center in Yongin, Gyeonggi Province, on Monday.

"I believe the semiconductor business would be able to achieve a similar sales record to that of ASM in less than 5 years (with the spin-off)."

Established in 1993, Jusung Engineering was the first in the country to develop semiconductor front-end equipment in 1995. Among the company's leading technologies is Atomic Layer Deposition technology, which the company supplies to Samsung Electronics and SK hynix, the world's top two memory chip makers.

Last year, the company achieved annual sales of 200 billion won ($146 million). Its market cap was 1.6 trillion won, lower than its rivals and far below Hwang's wish.

The market cap of ASM, the Dutch chipmaking equipment supplier, posted a revenue of 3.9 trillion won in 2023, and its market cap is estimated at 47.3 trillion won.

The company will turn into a holding company, tentatively called Jusung Holdings, while separating its semiconductor business into the new entity, Jusung Engineering. Its display and solar panel equipment business will be split off to be renamed Jusung SD, a wholly-owned subsidiary of the holding company.

Regarding the view that the planned spin-off is part of the succession scheme to hand over the company to his son Hwang Eun-seok, the chairman said "Nothing has been decided yet."

Eun-seok earned a doctorate in material science at Seoul National University and worked at Samsung Semiconductors for five years. He is expected to serve as the chief executive officer of the renewed Jusung Engineering.

"I never planned to train my son as my successor, but I guess he wanted to try (for the position), and did his best to prepare, like pursuing a difficult science major. ... But he will have to prove his ability," Hwang said.

The chairman holds 24.63 percent of shares in the current Jusung Engineering, while his son owns 2.17 percent.

He stressed that the spin-off also aims to disperse risks from the US-China rivalry.

“When we get on the wrong side between the two countries and our chip business goes down, we will have to shut down the entire company," Hwang added.

For the solar and display business, Hwang hinted at no more large-scale investment, saying they have almost completed the development of key technologies.