DB HiTek: A Korean Chipmaker Poised for a Profit Surge

DS Investment Securities reiterated its "Buy" rating and target price of 210,000 won for DB HiTek (KRX: 000990) on September 9th, while lifting its 2026 consolidated operating-profit estimate to 409 billion won. Based on the closing price of 103,400 won on September 8th, the implied upside is 103.1%.

The brokerage also raised its 2027 operating-profit forecast to 511.2 billion won. Notably, these upgrades came despite a downward revision to the assumed exchange rate — from 1,420 won to 1,380 won per dollar from the third quarter onwards — meaning the analysts expect volume growth, higher average selling prices (ASPs), and a richer product mix to more than offset the drag from a stronger won.

A rapid recovery in margins

DB HiTek's foundry division posted an operating margin of roughly 30% in the second quarter of 2026 on a standalone basis — a sharp recovery from the full-year margin of 16.9% in 2024. The company's annual operating profit had plunged 28.1%, from 265 billion won in 2023 to 191 billion won in 2024, as a prolonged semiconductor downturn took its toll. A rebound to 275 billion won followed in 2025, and DS Investment Securities now projects a further leap to 409 billion won in 2026, implying year-on-year growth of 49% and an operating margin of 24%.

Price rises secured, with more to come

Pricing power is the central driver of the earnings upgrade. DB HiTek implemented a 5% price increase in the first half of 2026. From July 1st, the company applied an additional 10% rise to Chinese customers, which DS Investment Securities expects to feed through to reported revenues from October. The brokerage concludes that a cumulative price increase of at least 15% within this year is already secured, and sees a growing likelihood of a further round of hikes around December.

The competitive environment supports this pricing stance. Capacity for BCD (bipolar-CMOS-DMOS) processes at Chinese foundries SMIC and Hua Hong is running at saturation. Texas Instruments, the American chipmaker, raised prices across its entire product range before July. When rival foundries and integrated device manufacturers (IDMs) raise prices in tandem, customer resistance weakens. On September 7th, Taiwan's UMC hit its daily share-price limit after reporting August revenues at their highest level in roughly four years — a signal that the recovery in the eight-inch, mature-node foundry market is gaining recognition globally.

Demand far outstrips supply

On the demand side, structural change is becoming entrenched. Customer orders currently stand at roughly twice DB HiTek's production capacity, and the order backlog is growing. A significant new source of demand is power semiconductors for artificial-intelligence data centres. While some customers are migrating to 12-inch wafer processes, DS Investment Securities argues that this loss is being more than offset by AI-driven demand and by the reduction in eight-inch supply as Samsung Electronics and TSMC restructure their own eight-inch lines.

A tighter supply environment also allows DB HiTek to allocate capacity preferentially to higher-margin, high-voltage (HV) products — improving the mix within its BCD portfolio. From the third quarter, the brokerage expects rising shipment volumes and higher ASPs to flow directly through to margin leverage, with no material increase in labour or other costs. Quarterly operating margins are forecast to reach 26.5% in the third quarter of 2026 and 27.3% in the fourth quarter, before settling at a full-year 26.4% in 2027.

Shareholder returns add to the case

DB HiTek plans to cancel 592,000 treasury shares — approximately 1.3% of shares outstanding — in the second half of this year, a move that should reduce dilution and bolster investor confidence.

Risks to watch

Currency risk is the most immediate concern. A substantial portion of DB HiTek's revenues is denominated in dollars; if the won continues to strengthen, revenue converted back into local currency will face a ceiling. DS Investment Securities has already factored in a more appreciated won, but further appreciation could undercut its forecasts.

The target price of 210,000 won was first set on May 12th, 2026. Four months on, the share price remains far below that level. The stock's 52-week range — from a low of 44,550 won to a high of 230,500 won — reflects substantial uncertainty about the timing and durability of the semiconductor cycle. Foreign investors hold 30.0% of the shares, making their sentiment a key variable.

At the current price, DB HiTek trades on a forward price-to-earnings ratio of 11.3 times for 2026, up from an actual ratio of 6.4 times in 2024. Some of the earnings recovery is already priced in. Whether quarterly results come in line with — or ahead of — analyst estimates will ultimately determine the direction of the shares.