According to Korean media reports, Samsung Electronics is adjusting its production strategy for high bandwidth memory (HBM) and plans to outsource the assembly and testing process of HBM to its subsidiary STeco. This decision is intended to solve the shortage of cleanroom space in the backend process that Samsung Electronics is facing, and to improve the profitability of STeco.

STeco, as a professional subsidiary of Samsung Electronics for the backend process of display driver integrated circuits (DDI), will take on the assembly and testing work of HBM. Samsung Electronics holds 70% of the shares of STeco, while Nitto Denko of Japan holds the remaining 30%. STeco plans to invest 3.35 billion won in the infrastructure construction of the new business, and the investment is expected to be completed within 2025.

Industry analysts believe that this cooperation may be the beginning of the outsourcing of the backend process of Samsung Electronics' HBM products. With the rapid growth in the shipment of HBM products, Samsung Electronics may not be able to rely entirely on internal resources to handle all production needs, and outsourcing some processes to partners will be an effective solution.

Last year, STeco's sales amounted to 21.91 billion won, a decrease of 29.7% compared to 2022, and its operating profit also sharply decreased from 700 million won in 2022 to 50 million won in 2023. By taking on the assembly and testing work of HBM, STeco is expected to improve its performance.

In addition, it is reported that STeco has established a special task force (TF) for the new business in the first half of the year and has received support from Samsung Electronics for the testing equipment needed for the new business. As STeco enters the new business field, its existing DDI backend process business is expected to gradually decrease, and this part of the business may be taken over by other domestic DDI-related packaging and testing (OSAT) companies.

Regarding the cooperation between Samsung Electronics and STeco on the assembly and testing of HBM, Samsung Electronics stated that it is currently unable to confirm the related information.