Applied Materials injects $40 mn in glass substrate maker Absolics

Applied Materials Inc., a global leading equipment and software supplier to semiconductor makers, has invested 51 billion won ($40.2 million) in Absolics Inc., a US subsidiary under South Korean chemical materials firm SKC Co.

SKC, a unit of Korea's second-largest conglomerate SK Group, said in a disclosure on Dec. 26, 2022, that it will raise 165.9 billion won via a rights offering to fund Absolics' facility construction in the US.

Absolics has issued 130,000 new shares. SKC purchased 90,000 shares for 114.8 billion won while Applied Materials bought 40,000 for 51 billion won. The transaction was made on Dec. 28, SKC stated.

Absolics will use the proceeds for building plants to produce semiconductor glass substrates in Covington, Georgia. The company broke ground for manufacturing facilities in November of last year.

A glass substrate is a thin layer of glass on which processing and memory chips can be mounted together to form the brains of a computing system. 

The substrates reduce the space required for a multi-chip package, allowing more chips to be packed into a single device and increasing the performance and energy efficiency of chipsets. 

The US company plans to build the facilities in two phases. The first phase, set to be completed by end-2023, is a $240 million investment to construct a manufacturing plant with a floor area of 120 million square meters. Absolics will focus on small-volume manufacturing first and start mass production at the plant in the second quarter of 2024. 

The second phase is expected to be an additional $360 million investment for high-volume manufacturing. Absolics is aiming to complete the second phase over the next three to five years.

Absolics' rights offering is expected to intensify ties between Korea and US semiconductor industries. 

During his visit to Korea in May 2022, Applied Materials President Gary Dickerson talked to SK Group Chairman Chey Tae-won and Samsung Electronics Co. Chairman Jay Y. Lee about chipmaking partnerships.

Last July, the US equipment supplier signed a memorandum of understanding with the Korean government to set up a research and development center for next-generation semiconductor equipment in Korea's Gyeonggi Province. The details of the facility were not disclosed at the time.  

SKC sold its industrial film unit to Korean private equity firm Hahn & Co. last month for 1.6 trillion won and is accelerating the expansion of its semiconductor and battery materials businesses.

If the company secures additional glass substrate clients, it will emerge as SKC's second-largest business following copper foil manufacturing, NH Investment & Securities Co. analyst Ju Min-woo said in a report last October.

Write to Ik-Hwan Kim at lovepen@hankyung.com
Jihyun Kim edited this article.