As investor interest in artificial intelligence sends shares of technology giants soaring, a little-known circuit board maker in South Korea is cashing in big.
(Bloomberg) — As investor interest in artificial intelligence sends shares of technology giants soaring, a little-known circuit board maker in South Korea is cashing in big.
Isu Petasys Co., which counts Alphabet Inc., Nvidia Corp. and Microsoft Corp. as customers of its multilayered boards, has seen its share price surge 487% this year – among the biggest gainers on South Korea’s benchmark stock index. The company’s recent boom has also helped boost the value of stakes held by Chairman Kim Sang-Beom and his family to more than $800 million as of August 3.
Kim, who controls 100% of holding company Isu Corp., is just the latest example of how soaring demand for AI investments is creating massive wealth. Jensen Huang, chief executive officer of leading AI company Nvidia, has seen his fortune surge almost three-fold this year to $39.9 billion, according to the Bloomberg Billionaires Index.
“Hardly any local companies directly supply Nvidia and Google, but Isu Petasys got the job,” said Baik Gil-hyun, an analyst at Yuanta Securities Korea Co. “If the AI boom continues, so will the interest in the company.”
Isu Petasys, founded in 1972, began distributing printed circuit boards, mainly for hard disk drives, in 1989. Its parent company, Isu Group, has businesses in industries including chemicals, construction and biopharmaceuticals.
Kim became the group’s chairman in 2000 after his father, Joon-sung, stepped down after four years. Before joining Isu, the younger Kim worked at the now-defunct industrial conglomerate, Daewoo Group, which was founded by his father-in-law Kim Woo-choong, according to local newspaper Korea Joongang Daily.
On top of their 26% stake in Isu Petasys, Kim and his family also own stock in the group’s other publicly traded units, including Isu Specialty Chemical and Isu Chemical. Company filings show that shares pledged for loans account for just under half of the total value of their stakes.
Diversifying Base
Isu Petasys didn’t make Kim available for an interview. The company didn’t respond to questions about their customers or the value of the family’s stakes.
In recent years, Isu Petasys has leaned into the AI craze, diversifying its customer base from predominantly telecommunications manufacturers like Nokia Oyj, and adding technology giants such as Alphabet and Nvidia, according to Park Hyung-woo, an analyst at SK Securities Co. in Seoul.
Orders for its boards used for AI accelerators jumped almost eight-fold to 47.3 billion won ($36.4 million) in the first quarter from a year earlier, according to a June presentation.
Other prominent players in high-end printed circuit boards include Japan’s Ibiden Co., Taiwan’s Unimicron Technology Corp. and Samsung Electro-Mechanics Co.
While the company’s revenue grew 3.9% to 172 billion won in the first three months of this year from the previous quarter, its operating profits fell 33% to 20.2 billion won, according to filings.
‘Obvious Beneficiaries’
SK Securities’ Park said he expects a drop in operating profits for the year, partly because Isu Petasys’s AI products are less lucrative than those sold for telecommunications devices. Despite that, he remains optimistic.
“The company is one of the most obvious beneficiaries because it’s actually seeing a growing portion of its revenue from AI-related sales,” Park said.
Increasing tensions between the US and China may have also contributed to Isu Petasys’s expansion, as US companies prefer non-Chinese suppliers, according to analyst Baik. Park said he expects AI-related business to make up 20% of the company’s revenue this year and at least 30% in 2024.
“It doesn’t look like AI is a temporary trend that will fade soon,” he said. “It could change the direction of the industry, like how PCs and smartphones did in the past. Then things look bright for Isu Petasys.”
–With assistance from Debby Wu.
(updates Jensen Huang’s fortune in third paragraph.)
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