Key points
- Simmtech rose 12.60% to 126,900 won ($91 USD) on the Kosdaq after Nvidia's results, and is up 27.3% in a week.
- The company makes about 70% of the substrates for SOCAMM, the new memory module Nvidia is putting in its AI servers.
- The company plans to invest 274.2 billion won ($197 million USD) in a Cheongju factory as part of a broader program worth about 400 billion won ($288 million USD).
- Second-quarter operating profit rose more than tenfold from a year earlier.
On August 27th, Simmtech (심텍) closed up 12.60% at 126,900 won ($91 USD) on the Kosdaq, one of the biggest winners in Seoul from Nvidia's earnings night. A week ago the stock traded under 100,000 won. It's up 27.3% since.
The company manufactures substrates, the thin boards beneath memory chips. Its position in Nvidia's supply chain centers on SOCAMM, a compact memory module developed for Nvidia's AI servers. Simmtech produces approximately 70% of the substrates used for SOCAMM. Samsung Electronics, SK Hynix and Micron, the three major memory suppliers, all buy from Simmtech and assemble modules for Nvidia. As Nvidia's memory orders flow through those manufacturers, one Kosdaq-listed supplier provides much of the underlying board volume.
Nvidia gave that supply chain a very good night. The company reported quarterly revenue of $96.2 billion, up 106% from a year earlier. It also told investors it expects revenue to grow another 70% next year as its next platform, called Vera Rubin, goes into full production. Korean coverage of the results singled out the SOCAMM substrate makers as direct beneficiaries, and fellow substrate maker TLB (티엘비) rose 6% the same day.
Simmtech had already decided to build for this demand. On August 25th, the company said it'll put 274.2 billion won ($197 million USD) into a new plant in Cheongju dedicated to SOCAMM module substrates, the first step in an investment it sizes at about 400 billion won ($288 million USD). "We must invest about 400 billion won in phases starting this year to secure production capacity," chief executive Kim Young-gu said.
The money follows the numbers Simmtech just reported. In the second quarter Simmtech's revenue reached 514.6 billion won ($370 million USD), up 51% from a year earlier, and operating profit rose more than tenfold. That's a sharp turn for a company that was losing money as recently as last year, when memory demand was weak and the AI server buildout had yet to reach the substrate layer.
The ride to this point has not been smooth, though. In June the stock fell 27% in a single stretch when reports questioned how fast Nvidia would really adopt SOCAMM. One local brokerage called the drop a buying opportunity. Two months later, Nvidia's telling the market the next platform is coming at full speed, and the substrate maker from Cheongju is worth about four times what it was a year ago.
The chief executive's comment is translated from Korean. Figures are converted to US dollars at 1,390 won to the dollar.
