In a research report published on 14th September 2026, iM Securities argued that ISC (KOSDAQ: 095340), a specialist maker of semiconductor test sockets, is entering a period of accelerating profitability, driven by rising average selling prices (ASPs) and a rapid improvement in its product mix. Because the report coincided with a change of lead analyst, iM Securities issued it without a formal investment rating (designated "Not Rated").

Sharply higher revenues and margins forecast

iM Securities projects ISC's revenue will reach 318.7bn won in 2026, a 44.7% increase on the 220.2bn won recorded in 2025. Operating profit is expected to jump 76.9%, from 60.1bn won to 106.3bn won over the same period. The operating margin is forecast to widen from 27.3% in 2025 to 33.3% in 2026—more than double the trough of 7.7% reached in 2023, representing a remarkable three-year recovery.

AI products displace legacy business

The engine behind this turnaround is a qualitative shift in the product portfolio. ISC's AI-related revenues grew more than tenfold in two years, from 12.8bn won in 2023 to 149.4bn won in 2025. That momentum has continued into 2026, with AI revenues of 55.3bn won in the first quarter and 59.1bn won in the second. Meanwhile, non-AI revenues collapsed over the same period, from 127.3bn won to roughly 13bn–13.8bn won, as the company pivots decisively towards higher-margin AI products.

By end-market, the data-centre segment has grown approximately 2.5 times in two years, from 60.6bn won in 2023 to 148.4bn won in 2025. In the first half of 2026, data-centre revenues accounted for 75–80% of total sales (54.2bn won in Q1, 55.0bn won in Q2). Exposure to smartphones, PCs, laptops, and automotive applications is shrinking rapidly.

Price increases to materialise in the second half

iM Securities expects the benefit of ASP increases to become visible from the second half of 2026. The mechanism is straightforward: demand is rising simultaneously for high-bandwidth memory (HBM) and SOCAMM2 sockets on the memory side, and for GPU, server CPU, and ASIC sockets on the non-memory side—all of which command meaningfully higher prices. Memory socket revenues already rose 55.5%, from 25.6bn won in 2024 to 39.8bn won in 2025, while non-memory socket revenues grew 22.0%, from 147.0bn won to 179.4bn won.

Capacity expansion underpins medium-term growth

ISC's current annual production capacity stands at roughly 2m units. The company plans to complete an expansion of its Vietnam Fab 1 facility in the second half of 2026, then bring its Songdo (South Korea) fab and a second Vietnamese facility (Fab 2) into full operation from 2027. The targets are graduated: 2.7m units in 2027, 3.7m units in 2028, and up to 5m units by 2029—2.5 times current capacity. This build-out provides the physical infrastructure to handle what ISC expects to be a sustained rise in orders.

Expanding into AI server connectivity

ISC is also moving beyond its core test-socket business. The company has secured an undisclosed new global data-centre infrastructure customer and is preparing to supply high-speed connectivity sockets used inside AI server racks. These components verify the speed and reliability of connections between the key modules of an AI server—CPUs, GPUs, ASICs, memory, networking, and storage chips—representing a meaningful broadening of ISC's addressable market.

Risks: valuation and concentration

Investors should weigh several risks alongside the growth story. ISC's shares closed at 190,200 won on 11th September, nearly 30% below their 52-week high of 271,000 won. On 2026 consensus earnings, the stock trades at a price-to-earnings ratio of 44.1 times, well above the 12.4 times seen in 2022 and the 28.0 times of 2024, suggesting that much of the good news is already priced in.

Customer and product concentration also warrants scrutiny. In the first half of 2026, test sockets accounted for 83.7% of revenues, overseas customers for 80%, and non-memory products for 80%. Should the global AI investment cycle slow, or key customers delay orders, earnings could prove volatile.

Company background

Founded in 2001, ISC pioneered the world's first commercial silicon-rubber test socket. The company was acquired by SKC—a chemicals-to-materials affiliate of the SK Group, one of South Korea's largest conglomerates—in 2023 and now sits within the SK family; SKC holds a 48.6% stake. Foreign investors own 29.4% of the shares. As of 11th September, ISC's market capitalisation stood at approximately 4.04tn won, and its share price had risen 176.2% over the preceding twelve months.