DEEP RESEARCH · DONGJIN SEMICHEM/SEMICONDUCTOR MATERIALS

Dongjin Semichem: Semiconductor Leadership, Energy Transition, and a Governance Inflection

An investment idea combining EUV photoresist, CNT conductive slurry, foaming-agent separation, and inheritance-tax catalysts

Date: 2025-10-03 · Company analysis and catalyst review · Naver Blog

0. Bottom line first

Official fact: The source divides Dongjin Semichem into electronic materials, foaming agents, and renewable-energy materials, and states that electronic materials account for more than 90% of revenue.

Interpretation: The core view is that the market is overfocused on Northvolt's bankruptcy and the governance discount, while underestimating the long-term earnings power of EUV PR and shareholder-return catalysts from succession.

1. Why Dongjin Semichem

The idea starts at the intersection of semiconductor supply-chain sovereignty and energy transition. Dongjin commercialized EUV photoresist once dominated by Japanese suppliers, playing a key role in Korea's materials, parts, and equipment self-reliance strategy. The source reads the company's cooperation with Samsung Electronics after Japan's 2019 export restrictions as elevating Dongjin into a strategic partner.

2. Business Model and Moat

Electronic materials are high-purity chemicals for semiconductor and display processes. The core product is photoresist, spanning i-line, KrF, ArF, and EUV, alongside thinner, stripper, etchant, and CMP slurry. Major customers include Samsung Electronics, SK Hynix, LG Display, and Samsung Display.

Foaming agents are sold under the UNICELL brand for shoe soles, auto interiors, flooring, and other uses. The source describes the company as having world-leading technology and market position in this niche. This business is expected to be split into a wholly owned subsidiary tentatively named Dongjin Inochem. Growth materials include CNT conductive slurry and silicon anode materials, with Samsung SDI and Northvolt mentioned as key customers.

Official fact: The source table notes that it uses figures consistent with FnGuide and multiple other sources, while acknowledging differences in 2022 revenue among some sources.

The economic moat comes from technology and switching costs. The source cites the world's top share in KrF PR for 3D NAND, Korea's only mass production of EUV PR, and High-NA EUV PR development as technical barriers. Once a semiconductor material is qualified in a process, changing suppliers can threaten yield and require costly requalification, creating customer lock-in.

3. Management, Capital Allocation, and Restructuring

Dongjin has continued R&D and CAPEX for growth, including EUV PR, CNT production facilities, and plants in Texas and Sweden. The source interprets a planned convertible bond issuance of up to KRW 500.0 billion as evidence of willingness to fund future growth. At the same time, Chinese display-asset sales and the foaming-agent split support a focus strategy around high-growth core materials.

Shareholder returns were historically weak. Dividend yield was about 0.3-0.5%, with no meaningful history of large buybacks or cancellations. After the founder's death, however, inheritance tax estimated at more than KRW 124.2 billion is presented as a catalyst that may align controlling and minority shareholders through higher dividends, share-price support, and stronger IR.

The foaming-agent split is interpreted as addition through subtraction. Separating the traditional chemical business can make the parent company a cleaner semiconductor and battery advanced-materials company. It may also help clarify business domains between Vice Chairman Lee Jun-kyu and Chairman Lee Jun-hyuk.

4. Growth and Profitability

Growth drivers are organized as Q, P, and C. Q is volume growth from EUV process expansion and CNT conductive-material growth. As Samsung Electronics, TSMC, and Intel move to sub-3nm processes, the number of EUV layers increases, expanding PR demand. As Korea's only EUV PR supplier, Dongjin is viewed as well positioned. For CNT slurry, reports cited by the source say monthly supply to Samsung SDI rose from about KRW 100 million to about KRW 5.0 billion.

P is product-mix improvement. Moving from lower-margin KrF/ArF PR and display chemicals toward higher-margin EUV PR and CNT slurry can lift ASP. C is cost reduction from the ramp-up of US and Swedish plants and higher EUV PR output. A reported reduction in thick PR usage in Samsung's 3D NAND process is a possible headwind for some product lines.

Revenue was KRW 1.1613 trillion in 2021, KRW 1.4572 trillion in 2022, and KRW 1.3099 trillion in 2023. In 2025 Q2, revenue and operating profit increased 6.0% and 7.7% year over year. Market consensus cited in the source sees EPS rising from KRW 2,476 in 2023 to about KRW 3,010 in 2024, while some forecasts mention 2025 EPS of KRW 4,670.

Interpretation: Northvolt's bankruptcy is clearly negative. The source acknowledges the loss, including the write-down of Dongjin Sweden AB's book value from KRW 12.0 billion to KRW 1.4 billion. But it also sees a diversification opportunity because BMW volume shifted to Samsung SDI, other battery makers may fill the roughly KRW 70 trillion order gap, and the completed Swedish plant remains strategically located.

5. Valuation and Strategy

The undervaluation case rests on the Northvolt shock, governance discount, and semiconductor-cycle slowdown. The source says Dongjin trades at a meaningful discount to global PR peers: historical PER of 10-11x versus TOK at 20x and Shin-Etsu at 17x, and 2020E PER of 11.8x versus JSR at 25.6x and TOK at 26.9x. Using 2024 consensus EPS of KRW 3,010 and a recent share price of about KRW 44,000 gives forward PER of about 14.6x.

The source cautions that the trailing metrics in the table are volatile, adding that PER was 6.94x on 2024 results and 15.63x on 2023 results. It also cites a 52-week share-price range of KRW 20,200 to KRW 45,000 and PBR around 2.3x.

On expected return, the source cites a late-2023 report that applied a 14.1x target PER to 2025E EPS and suggested a target price around KRW 63,000-65,000, implying about 70% upside versus the share price at that time. A more conservative approach applies 18x PER to 2024E EPS of KRW 3,010, implying about KRW 54,000, or more than 20% upside from the current price referenced in the source.

6. Catalysts and Risks

The source ultimately defines the Dongjin thesis as catalyst-driven valuation rerating. A stable and profitable core business provides margin of safety, while stronger shareholder returns, CNT customer conversion, the US plant, and the foaming-agent split could close the valuation discount.