LG Electronics shares jump on report of AI chip gear development

[HONG KONG] LG Electronics shares advanced in Seoul after a local media report that the company is developing cutting-edge tools for making the memory chips that work alongside artificial intelligence (AI) processors designed by Nvidia and others.

The South Korean company is targeting mass production of hybrid bonders for high-bandwidth memory (HBM) chips in 2028, Seoul Economic Daily reported, citing unidentified sources. LG Electronics said that it is conducting technical research on hybrid bonders for HBM, but the specific timing of mass production has not been confirmed.

South Korea is home to SK Hynix, a key supplier of HBM, which comprises stacks of Dram chips. Hybrid bonders are critical to the manufacture of HBM, enabling thinner stacks by directly bonding the electrodes of adjacent layers.

Other South Korean companies already making hybrid bonding equipment include Hanmi Semiconductor, Samsung Electronics’ Semes and Hanwha Vision’s Hanwha Semitech unit. Hanmi Semiconductor’s shares slid as much as 6.5 per cent on Monday (Jul 14) while Hanwha Vision’s fell 4.7 per cent and Samsung Electronics’ dipped 1.3 per cent.

“The entry barrier for the bonder market is quite steep, and the real edge lies with those who have been mastering the craft for years,” said Greg Roh, an analyst at Hyundai Motor Securities. “It makes sense to explore new business while the market is growing, but with strong players already in the game, it will require validation.”

The company could also face competition from abroad, with Bloomberg Intelligence analyst Sean Chen noting Hong Kong-listed ASMPT and the Netherlands’ BE Semiconductor Industries as potential rivals in hybrid bonders. “LG Electronics could face earnings pressure with rising R&D and capex, while sales contribution is likely to be limited to 2030,” he wrote in a report. BLOOMBERG