ISC earnings for the third quarter of 2026 showed AI-related revenue rising 46% from a year earlier, but production constraints held back total sales. The test-socket maker reported revenue of 71.8 billion won and forecast 97 billion won for the fourth quarter.

Key Takeaways

  • AI-related revenue reached 62.6 billion won, or 87% of third-quarter sales.
  • Management said a production bottleneck deferred roughly 11 billion won in orders to the fourth quarter.
  • ISC forecast fourth-quarter operating profit of 28.3 billion won to 38.3 billion won.

ISC earnings reflect AI growth and delayed orders

Third-quarter revenue missed market expectations as capacity constraints affected post-processing inspection and treatment, a labor-intensive stage of socket manufacturing. Management said the shortfall did not reflect weak demand and that the deferred orders were recognized in October.

The company said its Vietnam Fab 1 was operating at full scale from October and was helping to ease the bottleneck. Management expects both the fourth quarter of 2026 and the first quarter of 2027 to be stronger.

Memory revenue fell 20% year over year and 33% from the preceding quarter to 10.7 billion won, reflecting weakness in legacy products. A weaker US dollar against the Korean won also hurt profitability; the company said 95% of its transactions are in dollars.

Fourth-quarter forecast and pricing plans

ISC expects record quarterly revenue and operating profit in the fourth quarter. Its forecast of 97 billion won in revenue and 28.3 billion won to 38.3 billion won in operating profit is guidance, not a completed result.

Management attributed the expected margin improvement to operating leverage, price increases and a greater share of higher-value products. It said the CPU segment’s operating margin was already above 55%.

For 2027, management described planned price increases of 35% to 40% for ASIC customers, around 40% for CPU products and at least 30% for mobile application processors. It said memory pricing was still under negotiation.

Capacity expansion and 2027 growth target

ISC plans to increase annual production capacity from 2 million units in 2026 to 3 million in 2027, 4 million in 2028 and 5 million in 2029. Vietnam Fab 2 is targeting mass production in the second quarter of 2027, while the Songdo fab is targeting the first quarter of 2028.

Management targets year-over-year growth of more than 30% in 2027 and said growth could reach around 40% or higher if capacity expansion and permitting proceed smoothly. It identified ASIC projects moving into mass production as the expected largest growth contributor next year.

Next milestone

ISC plans to share full-year guidance at its fourth-quarter call in late January or early February 2027.

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