Samsung, Arm partner Gaonchips eyes US as next offshore base

Gaonchips Co., a long-term Samsung Electronics Co’s chip design house partner that also works with British fabless chip company Arm Inc., will advance into the US this year after establishing its first overseas operation in Japan last year in an accelerated global push, its chief said.

“Global expansion is a must for companies to leap forward but going global as a privately held company would not help us achieve that goal,” Gaonchips Founder and Chief Executive Officer Jung Kyu-dong said in an interview with the Korea Economic Daily on Thursday. “We hastened our IPO process to speed up our global push.”  

During the IPO winter last year, Gaonchips debuted on Korea’s tech- and bio-heavy junior stock market Kosdaq in May with fanfare.

It surprised the market with unusually strong demand for its public offering at a time when its bigger IPO rivals were forced to give up on planned listings due to sour IPO investor sentiment.

Gaonchips’ IPO share price was determined at 14,000 won ($10.56) apiece, above the top end of its indicative price band of 11,000-13,000 won, during the book-building session. It was also oversubscribed by 2,183.29 when the IPO shares were up for grabs to the public, with its subscription deposits piling up to 7.64 trillion won.  

Following the IPO, the company made inroads into Japan last year as its first overseas base and plans to set up a US operation this year.

“Gaonchips has never fallen into the red since its foundation,” said Jung. “It is expected to achieve 100 billion won in sales in 2025.”

The company earned 43.3 billion won in sales in 2022, up from 32.2 billion won in 2021 and 17.1 billion won in 2020.

Its shares have surged 127% year to date amid growing demand for system semiconductors, a core part of the generative artificial intelligence (AI) technology, which has made the system-on-chip design house’s role more important.  

LONG-TERM PARTNER WITH SAMSUNG

Gaonchips has grown organically without any mergers and acquisitions since its inception in 2012.

Its ascent as a chip design house that acts as a bridge between a fabless chip company and a foundry has been driven not only by its technology prowess in chip design but also its close partnership with clients built on strong communication and agility in problem-solving.

Gaonchips has maintained a longer partnership with Samsung Electronics than any other design solution partner (DSP). Even before it was designated as Samsung’s DSP in 2019, it worked with the world’s biggest memory chip producer as a virtual design partner.

“We understand each other without saying a word,” said Gaonchips’ CEO.

The company’s strength is its long-term relationships with Samsung Electronics, which have allowed Korea’s leading design house to carry out more than 200 projects for the key client, covering from 28- to 5-nanometer chips, said Jung.

With its wide range of services and technologies, it can offer the complete chip fabrication process on a turnkey basis from design to testing, packaging and mass production, he added.

As a chip design house, it is important to offer optimized services tailored to each foundry client; Gaonchips’ strength in doing so has enabled it to win the trust of Samsung Electronics. 

Jung was a former Samsung Electronics employee. He left the Korean memory chip giant four years after he joined the company in 1998.

He set up Gaonchips in 2012 with five other ex-Samsung men who worked at its foundry. It has grown into a company with 200 staff and recently moved to a new and bigger headquarters office in Pangyo, known as Korea’s Silicon Valley.

Gaonchips develops and mass produces semiconductors for mobile devices, vehicles, AI, security, displays and IoT technologies.

Gaonchips is also an approved design partner of the UK fabless chip company Arm.

Its shares lost 3.1% from the previous day to close at 24,900 won on Friday.

Write to Kyoung-Ju Kang at qurasoha@hankyung.com

Sookyung Seo edited this article.