SK-Electronics CO.,LTD.

Business Details

Designs, manufactures, and sells master plates (photomasks) required in the manufacturing process of LCD and OLED panels used in smartphones, personal computers, flat-panel televisions, and other products. In addition to domestic operations (head office), the segment manufactures and sells through Taiwan (DJ Photomask Co., Ltd.), and sells through South Korea (SKE KOREA CO., LTD.) and China (Aishike Electronics Trading (Shanghai) Co., Ltd.). Major customers are primarily China- and Korea-based panel makers, including BOE Technology Group, TCL China Star Optoelectronics Technology, Samsung Japan, and Tianma Microelectronics. This is the core segment, accounting for approximately 96.9% of the group's total sales.

Recent Overview

Sales declined but margin improved, aided by the change in useful life and increased demand for OLED panels

In the first half of FY2026 (ending March 2026) (October 2025 to March 2026), sales in the Large Photomask Business decreased to ¥13,911 million (down 2.3% year on year). The main cause was a decline in demand for LCD panels for VR devices in the Japanese market. On the other hand, this was supported by increased demand for 8th-generation OLED panel plants in the South Korea and China markets, as well as increased demand for IT products and automotive panels in the China and Taiwan markets. Operating profit increased to ¥2,474 million (up 8.8% year on year). Additionally, the change in the useful life of machinery and equipment from 5 years to 10 years increased segment profit for the current interim period by ¥969 million compared to the previous method.

Key Products

Growth Drivers

• Increasing demand for photomasks for 8th-generation OLED panel plants in the South Korea and China markets (progress in mass-production ramp-up processes)
• Expanding demand for LCD panels for IT products (end of OS support, spread of AI-equipped PCs) in the China and Taiwan markets
• Expanding demand for high-definition, high-functionality LCD panel products driven by the increasing number and size of automotive panel applications
• Gradual rise in panel prices driven by TV replacement demand ahead of the FIFA World Cup and early procurement in anticipation of rising semiconductor memory prices
• Expansion of customer share through a global sales structure leveraging overseas bases in Taiwan, South Korea, and China

Risks

• Dependence on the capital expenditure cycle of the flat panel display industry (risk of declining demand during panel price downturns)
• Risk of sales concentration in the China market (sales to China account for over approximately 60% of the group's total sales)
• Risk of changes in procurement behavior by customer panel makers due to U.S. trade policy and tariff measures
• Persistently high raw material prices due to geopolitical risks (the prolonged Russia-Ukraine situation and Middle East situation)
• Foreign exchange risk (given the high proportion of overseas sales, yen-denominated sales decrease during yen appreciation phases)
• While the change in useful life of machinery and equipment (from 5 years to 10 years) boosted profit in the current interim period, future fluctuations in the level of depreciation expense may affect business performance
• Risk of fluctuation in demand for specific applications, such as the decrease in demand for LCD panels for VR devices in the Japanese market