Daeduck Electronics has ended production of high density interconnection (HDI) boards, TheElec has confirmed Tuesday.
Daeduck’s exit follows those of Samsung Electro-Mechanics and LG InnoTek made last year __ the, now former, three top companies in HDI in the local market.
Production ended in April, people familiar with the matter said. The decision was made due to low profitability.
HDI are used as the main board in handsets and smartphones. Demand for them rose in the mid-1990s but has become saturated in recent years due to emergence of Chinese rivals who are offering them at competitive prices.
In 2015, Daeduck Electronics sold its HDI production equipment to Daeduck GDS. At the time, Daeduck said it will focus on making the more profitable semiconductor boards.
In 2018, it merged with Daeduck GSD and continued to make HDI, but it small quantities.
The company made 70 billion in sales from HDI last year, which only accounts for 6.5% of its annual sales of 1.07 trillion won, the people said.
Despite the low profitability, Daeduck supplied its HDI to Samsung Electronics’ mobile business, and the decision must have been difficult, they added. The delay in ending production was likely caused by this concern, they also said.
With the exit of Daeduck, the local HDI market will now be dominated by Korea Circuit, DAP and Isu Petasys.
Korea Circuit and DAP saw their supply of HDI for Samsung Electronics’ Galaxy S20 smartphone series rise this year due to Samsung Electro-Mechanics ending its HDI operations in Kunshan, China in 2019.
They will likely reap the benefit from Daeduck’s exit, separate people also familiar with the matter said. “In the long-run, South Korean companies will lose out in price-competitiveness to Chinese rivals. However, clients won’t be able to transfer all their supply to China, which will increase competition between the Koreans to win order,” they said.
Daeduck’s current mainstay is semiconductor boards and rigid flexible printed circuit boards (RFPCB) for smartphone camera modules, as well as boards used for telecommunication. It posted operating profits of 46.4 billion won and revenues of 1.07 trillion won last year. The company spin off to Daeduck, its holding company, and Daeduck Electronics in April. It relisted on KOSDAQ on May 21.