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Semiconductors & ElectronicsCommercial Due Diligence for a Semiconductor Consumables Manufacturer


Looxent conducted a Commercial Due Diligence (CDD) project for a leading domestic manufacturer specializing in semiconductor consumables. The target company primarily processes key consumables for CMP (Chemical Mechanical Planarization) processes, supplying major semiconductor manufacturers and equipment producers. Recently, the company expanded its product lineup to include consumables for Etch processes, driving significant revenue growth. Additionally, it manufactures a diverse range of small-batch, multi-variety consumables for semiconductor equipment and display processes.

A major domestic automotive parts manufacturer, aiming to diversify into the semiconductor sector, identified the target company as a potential investment opportunity. Looxent partnered with this client to perform a comprehensive CDD, focusing on key areas such as the capacity expansion prospects of major customers, an evaluation of the target’s competitive strengths, and mid-to-long-term revenue projections.

Industry Overview and Market Dynamics

The semiconductor process equipment market comprises essential functional components and various consumables requiring periodic replacement. Typically, key functional components are supplied directly by equipment manufacturers with proprietary technologies from the US and Japan. In contrast, consumables that can be localized are initially supplied by these equipment manufacturers. Over time, domestic companies develop alternative products to reduce costs and supply directly to Integrated Device Manufacturers (IDMs) and foundries such as Samsung Electronics and SK Hynix, shaping the market structure.

Revenue Projection Methodology

To project revenue, we first calculated the mid-to-long-term wafer production forecasts for NAND, DRAM, and Foundry product lines of the target company’s major semiconductor customers. Applying the target’s market share per product line, we estimated the number of wafers to be supplied.

For the NAND line, we incorporated the generational roadmap, production share per generation, and changes in CMP and Etch process steps to forecast the required number of steps and, consequently, the projected sales based on steps per unit product. For DRAM and Foundry lines, which do not follow a stacked structure, we analyzed historical performance and the impact of EUV process adoption to estimate future step increases and final demand.

Leveraging Looxent’s extensive semiconductor expert network, we verified the foundational data, ensuring the accuracy and reliability of our projections.

Risk Assessment and Mitigation

We identified key risk factors, including potential changes in the lifecycle of major consumables, the target company’s reputation, and supply sustainability. To address these risks, we proposed PMI initiatives grounded in Looxent’s deep understanding of the semiconductor industry and extensive experience with post-merger integration projects.

Strategic Recommendations

Based on our analysis, we recommended the following strategic actions to enhance the target company’s market position and drive sustainable growth:

  1. Capacity Expansion: Invest in expanding production capabilities to meet the increasing demand from key customers, particularly in the Etch process segment.
  2. Product Diversification: Continue expanding the product lineup to include consumables for emerging semiconductor processes, ensuring alignment with market trends.
  3. Supply Chain Optimization: Strengthen relationships with existing customers and explore new partnerships to secure a stable supply chain and enhance market share.
  4. Technological Innovation: Invest in R&D to maintain technological leadership and develop advanced consumables that meet the evolving needs of high-end semiconductor manufacturing.


The Commercial Due Diligence project confirmed that the target company possesses strong competitive advantages and significant growth potential within the semiconductor consumables market. By implementing the recommended strategies, the company is well-positioned to enhance its market share, diversify its revenue streams, and achieve long-term sustainable growth. This project provided valuable insights not only into the target company but also offered a comprehensive understanding of the broader semiconductor industry, enabling our client to make informed strategic decisions.



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LOOXENT

A  21F. Parc.1 Tower2, 108, Yeoui-daero, Yeongdeungpo-gu, Seoul, Korea 07335

T  02-546-8222      F  02-546-8226

E  service@looxent.com 

© 2024 LOOXENT. ALL RIGHTS RESERVED.