Fabless chip firm FADU seeks to restore tarnished reputation

FADU CEO Lee Ji-hyo, right, and Chief Technology Officer Nam E-hyun take reporter questions during the company's press conference in Seoul, Wednesday. Korea Times photo by Nam Hyun-woo

FADU, a Kosdaq-listed fabless semiconductor firm, said Wednesday its earnings are showing signs of improvement following contracts with global hyperscalers, pledging to regain investor trust.

“It took 10 years to get recognition in the global market as a system semiconductor fabless company, and we have been through many difficulties, but we are now coming out of the tunnel,” FADU CEO Lee Ji-hyo said during a press conference marking the company’s 10th anniversary.

“Among the world’s top four hyperscalers, FADU has secured mass production supply deals with two, with talks underway with another. We expect to finalize the deal by the end of this year and begin visible mass production from next year, with the goal of supplying all four within the next two to three years.”

FADU designs solid-state drive (SSD) controllers and other storage platforms for hyperscalers such as Amazon Web Service, Microsoft, Google Cloud, Meta and other large-scale cloud service providers.

An SSD is a data storage device based on NAND memory chips, which have replaced conventional hard disk drives in most consumer electronic devices. Controllers are like the brain of an SSD, managing data reading, writing and other operations to optimize performance and speed.

According to Lee, the main purpose of NAND is to reduce cost rather than maximize performance, which imposes limitations on speed and durability and motivates providers to maximize SSD performance through controllers.

FADU Gen5 SSD controller / Courtesy of FADU

Established in 2015, FADU gained global attention after developing its SSD controller Gen3 in 2018, which met new standards for high-speed connections at low power consumption levels.

Amid heightened expectations, the company developed Gen4 in 2020 and sought to expand its sales to top data center operators globally. At the same time, the company pursued listing on the tech-heavy Kosdaq market and debuted in 2023.

FADU went public with a market capitalization of 1.51 trillion won, which later rose to 2.29 trillion won. However, concerns emerged later that year as the company reported just 300 million won in revenue for the third quarter of 2023. Its second-quarter revenue showed sales of only 59 million won, far below the 120 billion won annual sales target it had presented to investors.

This triggered a massive backlash from shareholders, resulting in the country’s financial authority toughening scrutiny on tech-oriented firms seeking initial public offerings.

During the conference, Lee stressed that Gen4’s sales failed because of the COVID-19 pandemic, which boosted the global data center and chip market from 2020 to 2022 but harmed chipmakers that expanded their manufacturing capacity just before an unprecedented downturn in 2023.

“Although Gen4 turned into a lost two years for us, FADU’s technology and customer trust remained intact,” Lee said. “Because expectations and satisfaction with our products were still high, the rollout of Gen5 this year has put the company back on track for growth. There were misjudgments and a market downturn, but the company’s competitiveness and technology remain undoubted.”

In the first half of this year, the company posted 42.9 billion won in sales, matching 99 percent of last year’s total sales of 43.5 billion won, buoyed by the sales of Gen5.

“In a computing system, overall performance is determined by its slowest component,” Chief Technology Officer Nam E-hyun said. “Nvidia has recently realized that while graphics processing units and high-bandwidth memory (HBM) are fast in its data center systems, slow SSDs can drag down total performance. Since not all data can be stored in HBM and much of it has to go into storage, expectations for SSD speed are rising rapidly.”

Lee said the company is preparing its next-generation Gen6, and will work with its partners to target emerging artificial intelligence data centers, expanding from existing hyperscalers.

“We have learned from the past 10 years, and we are doing our utmost to ensure that customers, the market, shareholders and society will never be disappointed again. We will prove ourselves with real results,” Lee said.