South Korea's Haesung DS, a high-end PCB manufacturer specializing in package substrates and lead frames, reported a sharp earnings decline in Q1 2025, as weakness in its core substrate business weighed heavily on performance.

The company posted consolidated revenue of KRW 137.5 billion and operating profit of just KRW 400 million—down 11.2% and 98.3% year-on-year, respectively. The steep drop was mainly due to a 50% plunge in package substrate sales, a key area of its high-end PCB operations. The earnings decline was further compounded by unfavorable product mix shifts and rising material costs tied to depreciation.

Operating margin fell from 13.5% a year ago to just 0.3% this quarter, highlighting the scale of the hit to its PCB-related business.

Despite the setback, Haesung DS's lead frame segment remained a bright spot, delivering its third straight quarter of growth. Sales rose 9.9% in Q1, fueled by stable demand from the automotive and IT sectors. Analysts expect this momentum to continue, even as overall earnings may remain subdued in Q2.

Eugene Investment & Securities cut its target price for Haesung DS from KRW 34,000 to KRW 31,000, citing uncertainty around second-half recovery in substrates and SiP (System-in-Package) demand. Still, it maintained a “Buy” rating, pointing to long-term value and upside potential—particularly if memory semiconductor demand rebounds later this year.

Beyond its manufacturing operations, Haesung DS is also ramping up ESG efforts. Through a partnership with international NGO World Share, the company is providing monthly food and supply donations to students in Pampanga, Philippines, near its overseas facility. The initiative is part of Haesung DS's broader commitment to building sustainable ties with local communities.

As the global PCB market keeps a close eye on high-end packaging trends, Haesung DS's performance will serve as a key indicator of how demand for advanced substrates evolves through 2025.