The Korean OSAT specialist is leveraging the manufacturing know-how accumulated through its work with SK hynix to expand into non-memory semiconductor applications.
In recent years, as the domestic market has become increasingly saturated and competitive, it has become essential for Korean SMEs to adopt a global mindset in order to sustain growth. Many experts believe Korea is uniquely well positioned internationally, benefiting not only from strengths such as speed of execution and highly customized manufacturing, but also from the ongoing realignment of global supply chains. Do you agree with this assessment, and what opportunities do you see for Korean suppliers within global supply chains?
I agree that Korea can play a constructive and increasingly important role amid the ongoing geopolitical tensions between the United States and China. Korean technology has reached a level that is clearly recognized and trusted by the U.S. market.
That said, there are limits. For example, core equipment such as EUV lithography systems cannot be produced domestically. However, in many other areas—including certain policy-driven equipment segments and especially vacuum-related semiconductor equipment—Korea has reached a very high, world-class level. In fact, Korea’s semiconductor vacuum technology is now globally competitive, with excellent price-performance characteristics.
This creates meaningful opportunities. As the U.S. reduces its reliance on Chinese suppliers, Korean-made products are increasingly well positioned to serve as substitutes. Conversely, as Chinese suppliers face restrictions in accessing the U.S. market, Korean companies stand to benefit. The key question, therefore, is how Korean SMEs can effectively capture these opportunities.
Large corporations already dominate much of the domestic industrial landscape, and as a result, there is growing consensus—across government, industry groups, and the private sector—that SMEs must be given greater opportunities to participate in global supply chains.
In the United States, many state governments are seeking to build semiconductor-related platforms, but they often lack the necessary process technologies. Rather than partnering with large players such as Samsung or SK Hynix, they are increasingly looking to form joint ventures with SMEs. These states are offering attractive incentives, including subsidies, land, tax benefits, and employment support. At least two or three U.S. states are actively pursuing this model, which reflects genuine demand for backend semiconductor processes. For SMEs that can execute effectively, the probability of success is rising.
Cost, however, remains a critical issue. To be competitive, automation is essential.
At the same time, U.S. policy strongly supports leading foundries such as TSMC, Samsung, and Intel, driving a significant increase in wafer output. This naturally generates demand for advanced packaging, such as Amkor’s super-advanced packaging lines in Arizona. While these high-end solutions will be concentrated among top-tier players, there remains strong unmet demand for mid-level packaging and testing. At present, the U.S. lacks sufficient production capacity in these segments.
This is where companies like ours see opportunity. Memory packaging and testing—areas in which we have deep expertise—are representative of the mid-level technologies the U.S. market needs. While geopolitical conditions remain volatile, regardless of how U.S. policy evolves, we believe these dynamics represent opportunity rather than risk. We spent a great deal of time over the past year evaluating this carefully.
Given our medium size, rather than immediately entering the U.S. market, we initially focused our overseas efforts on China and Taiwan. Although the scale remains modest, we have secured meaningful customers and ongoing business. Much of this has been driven by the U.S.–China trade conflict. Many Chinese private companies retain strong domestic demand but face export constraints, prompting them to seek overseas production.
For example, if a Chinese IC supplier provides components for Hyundai-Kia vehicles, and those vehicles incorporate displays from a display maker in Korea, supply-chain management is often shifted to Korea to mitigate future U.S. export risks. This is the type of strategic guidance we increasingly provide to our customers.
By clearly defining our target customers and adjusting our business strategy accordingly, we have achieved modest but meaningful results. In this environment, rigorous market analysis and disciplined strategy are essential.
While much of the industry’s attention is focused on AI-related opportunities, the semiconductor market continues to evolve along multiple tracks. Leading players are investing heavily in AI chips and advanced nodes, but automotive semiconductors and commodity memory—still accounting for roughly half of the market—remain highly relevant. As backend processes are increasingly outsourced, what is your short-term outlook for the OSAT market?
In the short term, over the next one to two years, it is important to consider both domestic and international markets. Domestically, the overall semiconductor market has gradually contracted over the past two decades. While companies such as SK Hynix and Samsung have benefited recently from HBM demand driven by AI, most of that packaging work is handled in-house or by top-tier OSAT players, leaving limited opportunity for SMEs. Fortunately, APACT has secured the SOCAMM2 module testing business, positioning it for future growth in HBM-related applications.
At the same time, strong HBM production has driven up prices for legacy DRAM and NAND since late last year. While production volumes are expected to stabilize from next year, and full-scale operations at the Yongin semiconductor cluster are scheduled to begin around mid-2027, some incremental opportunities will still emerge for SMEs.
Beyond the domestic market, global strategies are essential. This is something we have been pursuing for several years, and our experience in India has been particularly promising.
Over the longer term, the OSAT market requires companies to leverage accumulated know-how, equipment, and technology transfer capabilities in order to move toward higher-end production. This is precisely the opportunity we are pursuing through our India strategy.
Today, we specialize in memory packaging—including stacking, CSP, and testing—but we are actively exploring how to apply these capabilities to system IC and non-memory markets, particularly overseas.
In 2023, approximately 90% of our revenue came from the domestic memory market. Our strategic priority is to diversify this structure and steadily increase the share of overseas revenue as well as system IC revenue.
APACT specialized in Packaging
Your joint venture in India with ASIP has become a centerpiece of your overseas expansion. As India and South Asia attract increasing OSAT investment, what opportunities does this first step in India create for APACT?
India is both our first and our final investment destination in South and Southeast Asia. Our objective is not simply to generate short-term revenue, but to leverage strategic partnerships—particularly with ASIP’s CEO, who spent over 3 decades in US Silicon Valley and India and has built an exceptionally strong global network.
Through joint meetings in Silicon Valley, including rooftop sessions attended by more than 50 CEOs and CTOs from leading companies, we became confident that this partnership was strategically sound.
India offers tremendous long-term potential. It combines a large population, widespread English proficiency, and development prospects reminiscent of China in earlier decades. Many global companies are seeking to invest there. For an OSAT company, operating in India presents challenges—particularly in human resources and operations—but strategically, the rationale is compelling.
Many U.S. companies are now looking to shift production from China or Taiwan to India in response to tariffs and geopolitical risk. Establishing a production presence early allows us to benefit over the long term. India’s relatively clean industrial baseline also makes it easier to deploy our packaging and testing technologies. Testing, in particular, creates strong synergies with our existing capabilities.
We are not pursuing expansion into Myanmar, Cambodia, or other Southeast Asian countries. India is our sole regional focus. Through India, we aim to attract U.S.-based fabless companies and design houses as long-term customers.
We have signed a technology transfer agreement with ASIP, which maintains strong networks across the U.S. and Europe. Under this arrangement, ASIP leads market development in Europe, the U.S., and India, while we focus on Korea, China, Southeast Asia, and Japan. We provide technology and equipment support, while both parties expand markets and network development in complementary ways.
APACT’s revenue remains heavily concentrated in memory, supported by more than 20 years of burn-in experience. At the same time, the company is pushing into system IC and automotive packaging. How do you see the balance between memory and non-memory technologies evolving?
Our strategic focus must increasingly shift toward non-memory and automotive ICs. The automotive semiconductor market offers consistent, long-term demand, whereas memory markets tend to be cyclical and seasonal.
We possess deep know-how in burn-in testing and reliability evaluation, developed over decades in memory. Our challenge—and opportunity—is to transfer that expertise into non-memory and automotive applications.
Automotive packaging and testing require exceptionally high quality standards and long qualification cycles, typically lasting one to two years. Entry barriers are high, but once a supplier is qualified, relationships often last five to ten years. This makes automotive a structurally stable and attractive market.
Over the past five years, we have worked on approximately 15 automotive device projects. Some were discontinued, while others are now progressing toward mass production. Hyundai-Kia’s strong global growth makes their supply chain a natural starting point for us.
Globally, customers demand proven mass-production experience, quality stability, and long-term capacity assurance. Meeting these requirements is challenging, but it defines our long-term vision.
Our core strengths—reliability testing, failure analysis, packaging and testing expertise, and cost-efficient operations—enable us to build trust with automotive customers. Internationally, our goal is to work with sustainable, global automotive IC manufacturers that can provide durable, long-term business relationships.
QFN2
APACT has also expanded its technological base through investments in semiconductor and display materials, including patented heating jackets and nano-material heating elements. What investments are you planning beyond OSAT?
Beyond OSAT, we are deliberately diversifying into stable, cash-generating businesses. One example is heating jackets for semiconductor piping systems, which significantly reduce power consumption while delivering strong performance.
We are also finalizing additional businesses that fall outside traditional OSAT, but remain within the broader semiconductor ecosystem. These initiatives are approximately 90% complete.
As one indicator of market confidence, our share price has risen from around KRW 2,000 last year to approximately KRW 6,800 today—an increase of more than threefold as of January 2. This reflects growing recognition of APACT’s growth potential and strategic direction.
To conclude, I would like to emphasize the strong future not only for APACT, but for Korean OSATs as a whole. By strengthening communication and collaboration among Korean companies, we can build a globally recognized “Korea brand.” Enhancing global competitiveness will require strategic cooperation, avoidance of redundant investments, and improved capital efficiency. That, in my view, is the path forward.
Interested in learning more? Click here: http://www.apact.co.kr/eng/Index
0 COMMENTS